Playboy Posts Loss as It Mulls Hugh Hefner and FriendFinder Bids

Hugh Hefner Playboy
Hugh Hefner Playboy

Playboy Enterprises Group (PLA), which founder Hugh Hefner wants to take private, today reported that its second-quarter loss eased compared to the year-ago period as gains in its licensing business offset declines in publishing.

Its net loss for the quarter ended June 30 was $5.4 million, or 16 cents a share, versus a net loss in second-quarter 2009 of $8.7 million, or 26 cents a share, a year earlier. Revenue fell 10% to $56.2 million from $62.2 million, the Chicago-based company said in a statement. The results included a restructuring charge of $1.6 million related to the closing of the company's New York office. Analysts were expecting a loss of 15 cents. Licensing was the only bright spot in the quarter.

Shares of Playboy have soared nearly 60% over the past six months as investors hoped that Chief Executive Scott Flanders would be able to turn around the adult-entertainment company. The stock price also jumped after the news of Hefner's buyout bid and a competing offer from Penthouse magazine parent, FriendFinder, came out. No deal has been made to date.

By segment within Playboy, the Entertainment Group's second-quarter 2010 income was $1.6 million, down from $2 million in the same period last year as revenues fell to $22.7 million from $23.8 million. The Print/Digital Group reported a loss of $1.2 million as improved digital results were more than offset by $1.6 million of higher litigation expense. Revenue fell to $20.9 million from $28.3 million. the 2010 second quarter. Playboy magazine circulation and advertising revenues declined as expected compared to last year, reflecting both the company's decision to lower the magazine's rate base by 42% and to publish one double issue last year.

Segment income for the Licensing Group rose 35% to $6.4 million in the 2010 second quarter compared to $4.8 million last year on 24% growth in revenues to $12.4 million from $10.1 million. Higher sales of consumer products in Europe, Asia and Latin America primarily were responsible for the segment's top- and bottom-line growth in the 2010 second quarter compared to last year.

Any buyer of Playboy will need the plenty of patience while waiting for a turnaround.