Maria Zilberman//Daily Record Business Writer//August 1, 2012
//Daily Record Business Writer
//August 1, 2012
The Dolan Company, owner of The Daily Record, lowered its full year earnings guidance Wednesday after posting an increase in profit but a decrease in revenue for the second quarter.
Net income attributable to The Dolan Company was $4.9 million for the quarter, or 16 cents per share, a 91 percent increase from $2.6 million, or 9 cents per share, earned in the second quarter of 2011.
A one-time purchase accounting adjustment reduced Dolan’s expenses by $10.4 million, to $52.4 million. Otherwise, expenses would have been $62.8 million, slightly down from $63.0 million in the corresponding period of last year.
Revenue fell 6.8 percent to $63.8 million from $68.4 million a year ago. Analysts polled by MarketWatch had been expecting an average of 12 cents per share in earnings.
“We continued to see softness in our mortgage default processing operation, and our e-discovery business experienced a greater than expected revenue softness due to timing of matters,” James P. Dolan, chairman, president and CEO of the company, said in a conference call.
A New York City-based investor noted during the call that it was the sixth time in seven quarters that the company has lowered expectations.
Total 2012 revenue is now expected between $265 and $278 million, down from the $290 to $300 million that the company had said it was expecting. Net income attributable to The Dolan Company had been forecast to be between 26 and 42 cents per share, but was lowered to between 23 and 38 cents.
Dolan has two divisions, business information and professional services. The business information division has mainly business and legal newspapers in 20 markets.
That division saw revenue of $19.5 million, a 2.6 percent decrease from the second quarter of 2011. However, the second quarter saw the first year-over-year increase in public notice advertisements in seven quarters.
The company’s professional services division, which provides specialized services to the legal profession through subsidiaries NDeX, Counsel Press and DiscoverReady, saw revenue of $44.3 million, an 8.5 percent decrease from the corresponding quarter in 2011.
“I think the bigger issue to me was perhaps that the e-discovery services had a subpar rate of growth,” said James C. Goss, an analyst with Chicago-based Barrington Research.
That business saw 6 percent growth in revenue, but Dolan said he was optimistic for a stronger second half of the year as e-discovery business expected in the second quarter has started to flow during the third.
The company has also added three Fortune 100 clients and expects to benefit from Fannie Mae’s recent increases in attorney fees, he said.
Shares of Dolan’s stock were unchanged Wednesday, closing at $4.88 on the New York Stock Exchange.