WE’RE UNCLEAR ON THE CONCEPT

Your nation’s largest radio broadcaster, Clear Channel Communications posted its 2Q 2001 earnings on Tuesday (8/7) and we’re declaring it the must-read of the summer. OK, maybe not. But it’s worth perusing. OK, maybe not.

The short of it is that the company posted losses, thanks to that much-dreaded advertising slump and the costs of its purchase of AMFM. Hey, as mom used to say, "You pay for a multi-billion-dollar merger and see if you don’t accrue some expenses." If your idea of long-term thinking is planning tomorrow’s lunch, please remember that advertising will rebound and merger costs are now mostly behind the media giant.

Not to worry, says our broker. With a price target in the $71 dollar range and the stock at around $58, he gives CC shares a "strong buy" rating.

Clear Channel posted second quarter revenue of $2.2 billion, up 126 percent compared with last year. On a pro forma basis, the company lost $237 million, or 40 cents a share. Analysts expected a loss of 28 cents a share.

Analysts at Salomon Smith Barney believe that the AMFM stations will start to begin "positively contributing" by late 2001/early 2002.

In the same period of 2000, CC gained $31.2 million, or 9 cents per share.

Excluding costs of the buyout, revenues dipped 1.5% against last year’s numbers—which were bolstered by a huge advertising year.

After-tax cash flow, which CC and most analysts seem to prefer as a measuring stick, was $470 million, or 75 cents per share, versus 2000’s $271.8 million, or 73 cents a share. That taxman sure do take a bite.

Though revenue more than doubled over the previous year, thanks to AMFM, expenses nearly tripled, rising to $1.5 billion from the previous year’s $562.7 million.

Good news came from Clear Channel Entertainment (what used to be SFX): revenues rose 12% to $706 million, with cash flow up 11%, despite a slumping live entertainment sector.

In a conference call with analysts, which we downloaded as an MP3 off KaZaA, Clear Channel CFO Randall Mays said that CC’s radio segment would improve. "We're encouraged that our sales effort is coming together. And I love it when a plan comes together."

The stock closed up 51 cents on Wednesday, on a down day for the overall market and hitsdailydouble.com.