Playboy Sees Sharp Ad Sales Drop, Shares Tumble

Adult entertainment company Playboy Enterprises forecast a sharp decline in advertising revenue in the current quarter after posting a third-quarter loss, and its shares fell nearly 23 percent.

Third-quarter revenue fell 15 percent to $70.4 million, partly because of the company's decision to sell its television studio assets and to outsource its e-commerce operations.

Analysts on average were expecting revenue of $75.5 million, according to Reuters Estimates.

Playboy said its net loss was $5.2 million, or 15 cents per share, for the quarter ended Sept.30, after it had to take $6.3 million in previously announced restructuring charges and provisions for reserves.

The publishing division made a loss of $1.3 million as revenue fell 6 percent to $21.8 million. The company said that it expects a 17 percent decline in advertising revenues in the fourth quarter compared to last year.

Playboy, which publishes the world's most widely read adult entertainment magazines, said in October that it would close its DVD business, one of a number of steps it is taking to save $12 million a year. It has said the move would cost 80 jobs.

Excluding special charges, it reported a third-quarter profit of 4 cents per share, better than the average analyst forecast for a loss of 1 cent, according to Reuters Estimates.

In the year-ago period, Playboy posted a profit of $2.6 million, or 8 cents per share.

"We were pleased to return the company to profitability, excluding charges and reserves, but we can do better," Chief Executive Christie Hefner said in a statement, adding that Playboy's focus on its licensing business and streamlining operations would produce profitable growth next year.

The company said administration and promotion expenses fell 42 percent from a year earlier.

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