Berko: Now's not the time to invest in New York Times

By Malcolm Berko, Columbian business columnist

Published:

 
photoMalcolm Berko

Dear Mr. Berko: I used to own New York Times stock back in the early 1980s when it traded in the $80 price range. I bought 500 shares last year at $12 because I felt the stock was cheap and its business could recover and because I heard that it might be bought out at $28. Now I hear that there may be a buyer from Japan or Australia. Should I continue to hold the stock, or are those rumors dead? Also advise me on Yandex, which you recommended in March at $30. I bought 200 shares then. The stock went down to $21, and I nearly choked.

— J.W., Kankakee, Ill.

Dear J.W.: There has been a persistent rumor that The New York Times Co. (NYT-$14.68) is for sale. Well, Executive Editor Jill Abramson was just canned, so it could happen. A few years ago, I’d not have believed an American icon such as The Wall Street Journal would change ownership. But “Rupe” Murdoch, an Aussie magnate with cavernous pockets, bought the Journal in 2007 for $5 billion, and it has not been the same since.

Meanwhile, the rumor of an NYT buyer making rounds is ascribed to Chen Guangbiao, a Chinese billionaire, the American equivalent of our orange-headed, corpulent Donald Trump. Chen is an over-fat egomaniac who sometimes wears trademark lime green suits and counts his mistresses the way insomniacs count their sheep. This bloviating tycoon, whose business card would have been a huge hit on “Laugh-In,” has no more idea of how to run a newspaper (especially The New York Times) than would a dung beetle have to play a harpsichord. Even though NYT’s revenues last quarter were up 2.6 percent (net income was down 8.5 percent), CEO Mark Thompson and Publisher Arthur Sulzberger sold over 50,000 shares each in April at $16 plus change. NYT is facing a muddy road ahead and has lost some ace reporters. The shares have doubled their price in the past year. But despite that and the rumor that it will be acquired, I believe the stock will be a lackluster performer and offers little appreciation potential.

As far as Yandex (YNDX-$30) goes, the last time my timing was so bad was in late August 1987. I invested $13,800 from a maturing certificate of deposit and purchased three stocks, which I had painstakingly researched, for my individual retirement account. I was so darned certain of my choices that I grinned for a week like a Cheshire cat. A month later, the market imploded (it was Black September) like a descending fireball, and my IRA plunged 43 percent in just six hours.

In early January of this year, YNDX (the Russian Google, with 62 percent of the Russian search market) was trading at $45. In March, Vladimir “The Conqueror” Putin decided to expand his empire and moved into Crimea, taking a piece of Ukraine, and YNDX crumbled to $30. And when I spoke to sources at Bank of America and Credit Suisse, they aggressively recommended YNDX with a short-term target at $45. Made sense to me because HSBC, Goldman Sachs and a few other biggies and “hedgies” were impassioned about the “potential opportunity to acquire an exciting equity at an attractive price.” Then a couple of weeks later, in April, the Russian Federal Assembly suggested legislation that would classify Internet companies as “strategic assets,” and Vladimir declared the Internet as a “special project” of the CIA. Then Vlad criticized YNDX for having excessive and dangerous exposure to Western influence, and the shares tumbled below $22.

I emailed you in late April: “Hold your Yandex, and if you can handle the risk, purchase another 100 shares.” It’s now $30 again! Neither Vladimir nor his parliament will halt the growth of this search engine company. And though the Russian population may approve and support Vladimir’s expansionism, it won’t accept control of the Internet, so it’s unlikely there’ll be additional fallout over Vlad’s suspicions. YNDX is still a gamble, based upon the political differences of its operating theater, and sometimes those differences can be terribly scary. However, projected huge growth revenues and earnings are still very much on target, and I’d buy YNDX again.