The New York Times Company reported a profit of $39.1m for its second quarter, beating Wall Street estimates forecasting a loss.

Three months ago it reported a loss of $74.5m for its first quarter.

The net income was 27 cents a share, compared with 15 cents a year earlier. Excluding special items like one-time charges and the tax adjustment, net income in the most recent quarter was 8 cents a share; analysts had forecast, on a comparable basis, a 4-cent loss.

However, this does not signal a turnaround in the newspaper sector. Profitability was achieved by severe cost cutting measures and a favorable tax adjustment.

The company trimmed operating costs 20 percent from a year earlier, or by $140.5 million; $29 million of that reduction came from the closure early this year of City and Suburban, a money-losing newspaper and magazine distribution subsidiary.

"For the full year we expect to save $450 million," (Janet) Robinson (CEO) said. "That amounts to 16 percent of our 2008 cost base."

Ad revenue plunged by nearly 32 per cent, the steepest decline since the Depression. Revenue from online operations dropped 14.3 per cent to $78.2 million.

Foremski's Take:

Clearly, the New York Times Company cannot continue to cut costs in order to make money. It's not a sustainable business strategy. And with online revenues falling it will be forced to come up with a way of charging its online readers.

Ms Robinson told analysts that the company is "undertaking quantitative and qualitative research as to how many of our readers would be willing to pay for online content, and how much they would pay. At this time, our work is centered on a metered model and a Times membership model with special offerings."

This is not a new strategy. The New York Times had to abandon an earlier attempt to charge for content.