TV, Online Drives Pleasing Playboy Profit

Playboy Enterprises Inc. (PLA) on Wednesday reported a better-than-expected quarterly net profit, helped by strength at its television and online operations that overcame lower results at its flagship magazine.

The adult entertainment company, whose shares jumped more than 11 percent, also backed its previously issued earnings and revenue forecasts for full-year 2005.

In the fourth quarter, "the drivers were our higher margin businesses of entertainment and licensing," Chief Executive Christie Hefner (search) said in an interview.

She said growth in those businesses this year should help outweigh anticipated declines at the publishing unit, which is facing a sluggish start so far to 2005 in drawing ad sales and is paying higher paper costs.

Playboy, whose holdings include Playboy magazine, adult cable TV channel Spice and a licensing business that markets the trademark Playboy bunny on clothing and other products, said fourth-quarter net profit was $14.5 million, or 43 cents a share, compared with a year-earlier net loss of $6.7 million, or 26 cents a share.

Excluding an insurance recovery of $5.6 million, quarterly profit was $8.9 million, or 26 cents a share, easily beating the average forecast of 16 cents a share from analysts polled by Reuters Estimates.

Playboy had a year-earlier profit before special items of $1.8 million, or 5 cents a share.

Quarterly revenue fell to $89.6 million, from $91.1 million, hurt by lower publishing revenue from a year earlier when results included sales of Playboy's 50th anniversary edition.

Profits at the publishing unit should be "significantly lower" this year, Playboy said.

"The quarter itself was substantially better than expected," said Dennis McAlpine, a stock analyst at McAlpine Associates. Faster-growing businesses like the entertainment unit overcame the lower results at the publishing unit, which typically does not make much money for the company, he said.

"People have pretty much come to the conclusion that publishing is sort of a give-and-take thing," at Playboy, he said. "It's a branding tool as opposed to a real profit generator."

The company reiterated prior forecasts for full-year earnings of 40 cents to 45 cents a share, excluding stock-based compensation expense, and a 6-percent rise in revenue to about $350 million.

Analysts on average expect profit of 46 cents a share this year on revenue of $348.5 million, according to Reuters Estimates.

Shares were up $1.45 at $14.14 in afternoon trading on the New York Stock Exchange.