Viacom Inc. (NYSE:VIA-B) dropped to its lowest stock price in 52 weeks, as CEO Philippe Dauman announced this week that advertising growth in the second quarter will be down more than expected.
On the domestic side, Dauman said ad sales will grow in the 3 to 4 percent range, similar to last year's performance in the same quarter. The company took a hit on its stock because the original assessment was growth in the 7 percent area, much like they enjoyed in the first quarter.
This of course isn't unexpected, as the major advertising categories like automotive and banking have cut down on their spending as the economy continues to be sluggish.
Even so, for Viacom some, like Wachovia Capital Markets analyst Jeff Wlodarczak, think they are less vulnerable than other media companies to a downturn.
"Viacom appears less immune than expected from the weak U.S. ad environment and realistically the ad results acceleration story for Viacom may be over as the economic environment appears to be overwhelming Viacom's ratings strength," said Wlodarczak.
Others think either Viacom has overreacted to the economy with the announcement, thus reducing expectations for investors and shareholders, or it's worse in the industry than expected, and Viacom is experiencing it first.
It really won't be known until June whether this is restricted mostly to Viacom, or it's across the industry.
The stock fell as low as $35.78 on Thursday.
Here in this and the difficulty, seems to me is necessary to wait of the end of June, something then can and clear up, and is now useless about what or to speak.
Posted by: Bernard Lavilliers | June 4, 2008 11:37 AM | Permalink to Comment