The $1.5 million, or $0.04 per basic and diluted share, is a substantial increase over the net income of $0.8 million, or $0.02 per basic and diluted share, for the same period in 2006.
The company also reported that operating income for first quarter 2007 increased to $3.9 million, compared to $3.5 million for the first quarter of the prior year, and an increase in revenues from $82.1 million first quarter last year to $85.4 million in 2007.
“Moreover, we are responding to changing dynamics in the domestic TV and publishing industries,” Playboy Chairman and Chief Executive Officer Christie Hefner said.
Operating income for Playboy's licensing division rose 77 percent, from $4.3 million to $7.7 million over the prior year, while the group’s revenue climbed 51 percent from $7.4 million to $11.2.
Hefner said she expects the licensing division to continue its strong performance throughout 2007.
“Licensing will report a banner year with 2007 revenues and profits now expected to increase approximately 20-25 percent in 2007, excluding the sale of artwork,” Hefner said. “We are seeing strong performance in our consumer products business, and our venues at the Palms in Las Vegas are performing well. We are focused on announcing the completion of a second location-based entertainment deal this year.”
While Playboy's licensing group posted gains, other divisions, including the company’s domestic TV and publishing groups, showed declines both in revenue and operating income.
Playboy's Entertainment Group declined from $7.9 million in first quarter 2006 to $4.3 million in 2007, with a 1 percent decline in revenues to $50.9 million. Total domestic television revenues decline 12 percent to $19.7 million compared to the prior year period.
In a press release issued today, Playboy stated that the “loss of exclusive carriage on one satellite service in April 2006 and the continuing transition in cable from linear networks to a more competitive VOD environment contributed to the year-over-year decline.”
PEI’s publishing group posted an operating loss for the quarter of $2.4 million, and a 1 percent decline in revenues compared to last year, with total revenue of $23.3 million. The company further reported that revenues for Playboy magazine itself were “essentially flat” in the first quarter, with a 22 percent increase in advertising sales offsetting an 8 percent decrease in circulation revenues.
During Tuesday’s conference call, several investors raised questions about the strength of Playboy's domestic TV division, and one asked Hefner if “stabilization,” and not growth, is the realistic goal.
“Stabilization is not the long term goal,” replied Hefner, “but it is a crucial first step.”
Hefner added that despite the reduced revenue reported for the domestic TV section, she felt the company had reached stabilization for that division.
