Entercom Communications Corp. (ETM)

Missed the right time to short it but still :) Ultralong's blog example for "garbage stock"

Entercom Communications is in the weak radio broadcast field that is highly dependent on advertising revenue which is still in short supply. Still, the 20% slashing the stock received after beating the street estimates seems a bit much, especially since Entercom has been doing a decent job of maintaining profitability and slashing debt. Part of the decline in share price is due to a jury award that timed the earnings report almost suspiciously. The jury award of $16 Million would take a serious hit on Entercom's cash balance if they end up liable for the entire amount. My assumption is that insurance should pay part of it and that there are appeal processes that may result in an out of court settlement for less. the award took two years and is only a 'county' level trial. Entercom somewhat admitted guilt by firing 10 employees over a contest stunt that encouraged participants to forgo common sense and hold their wee for a Wii. Quite a prize that the 28 year old mother who died played a silly game over. Back to the books, again, debt is being managaged, income is down 23%, but revenue beat the 2nd quarter. Free cash flow is down 22% but still postitive at $21.7 Million. I still don't like the debt, but the leverage ration is 5.6 and advertising seems to be rising as we enter into a somewhat tepid, but slightly positive holiday season.