CBS shares took a big hit Thursday after the media giant reported mixed second-quarter results.
CBS stock was down as much as $1.62 each (6%) in early trading Thursday, rebounding somewhat in the afternoon to $26.47 per share, down 68 cents each or 2.5%.
Driving the decline was less than stellar second quarter results, fueled by continued poor performance at its CBS Radio unit. Revenue for the quarter was down 1% to $3.5 billion and operating income before depreciation and amortization (OIBDA, a measure of cash flow) declined 6% to $858.9 million. Net income rose 29% to $489.8 million (64 cents per share).
Driving the decline in revenue and OIBDA was continued poor performance at radio. CBS radio reported revenue of $519 million, down 8% and OIBDA was $227.9 million, a 19% decline. CBS also said that lower sales for DVDs – it began distributing DVDs through a third party instead of in-house during the quarter – also had a negative impact on overall revenue.
On a conference call with analysts, CBS CEO Les Moonves reiterated the company’s focus on shoring up its radio properties, adding that moves to sell 10 non-strategic radio stations are progressing.
Moonves added that CBS has received “dozens” of offers from interested parties, which are being reviewed. He added that an announcement could be coming shortly.
In a research note, Merrill Lynch & Co. analyst Jessica Reif Cohen said the results were in line with her expectations, but added that a lack of clarity on what CBS intends to do with its rising cash position put some pressure on the stock.
CBS has more than $1 billion in cash, mainly from the recent sale of its Paramount Parks unit to Cedar Fair for $1.2 billion. Investors had hoped that CBS would use at least some of that cash to either buy back stock or raise its dividend. On the conference call, Moonves said no decision has been made yet.
“No news is not always good news,” Reif Cohen wrote in her report.