Last week was a reasonable one for Australian investors with two tough trading days to start the week eliminated by a 1.4% rise on Thursday to leave the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) 0.74% higher over the five days. The rise took the one-month loss to 2.97%, the three-month loss to 4.63% and brought the year-to-date gain to just 2.48%.
Unfortunately for investors in many of Australia's advertising and media companies, it was a REALLY tough week! Most traded significantly lower following a shock profit downgrade from sector leader Nine Entertainment Co Holdings Ltd (ASX: NEC).
8 Struggling Blue Chips
Seven West Media Ltd (ASX: SWM) led the pack, falling nearly 15% over the week to finish at a 12–year low of $1.01, after Nine reported that earnings would be between $285-290 million, down from prior guidance of approximately $311 million. Nine's share price fell by 14%, while Fairfax Media Limited (ASX: FXJ) fell by a comparatively comfortable 4% and Southern Cross Media Group Ltd (ASX: SXL) fell 6%.
Media companies fell after Nine noted in its statement that earnings would fall due to a "softer than anticipated Free-To-Air advertising market in the second half which is now expected to be in low single digit decline, driven by particularly soft conditions in May and June. Previous guidance assumed Free-To-Air market growth of c2% in the period."
Other companies to fall included Spark New Zealand Ltd (ASX: SPK), presumably as part of the fallout from the ACCC expressing concerns about the iiNet Limited (ASX: IIN) takeover by TPG Telecom Ltd. (ASX: TPM).
XERO FPO NZ (ASX: XRO) shares also fell further back to earth. The cloud accounting company surged from $14 to $25 in the space of three weeks in early March but has since drifted lower again, on Friday falling below $18 for the first time in three months to close at $17.59.
South32 Ltd (ASX: S32) closed marginally lower for the week, down just 2% and it was dropped from the ASX20 after its first four weeks of trading. South32's share price is now 15% below the peak of $2.45 reached in late May.
A similar trend continued at REA Group Limited (ASX: REA) too. The company's shares fell 2.5% over the week to close at $38.36, 20% lower than three months ago, however I expect the share price won't stay subdued for too long. Great companies rarely stay down!
Time to buy?
