Cisneros out at Univision

Stock tumbles despite record upfront ads of $501 million
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Last week was a tough one for Univision. First, the company's high-profile president, Henry Cisneros, resigned.

Just days later, Univision shares tumbled 20% after the company announced what would seem to be the good news of record upfront advertising of $501 million, up 18% from a year ago. Unfortunately, Wall Street was expecting a 20% gain or better, prompting a major sell-off.

On a hastily arranged conference call last Wednesday (Aug. 9), Univision executives told financial analysts that the market "dramatically overreacted" to Univision's upfront sales total. Executives also said that the underperformance came as a result of AT & T and MCI pulling about $30 million in ads for their so-called "dial-around" long-distance telephone services. They said the companies indicated they would spend the money later.

As a result, the telcom category now accounts for 5% of Univision's upfront, compared with 13% in 1999. Nevertheless, company executives said their sales, outside the telcom sector, were on target and that they did not anticipate lower revenue or profit projections for 2001.

Univision shares dropped as low as $86 in trading last Wednesday when it revealed its upfront sales figures. Just two weeks ago, Univision shares had reached an all-time high of $124.25.

That news hit just two days after company President Henry Cisneros announced his resignation in order to form a San Antonio-based company that would build affordable housing in selected cities. Executives told analysts there was no connection between Cisneros' departure and the sales setback.

There's no word on a replacement yet. Univision Chairman Jerrold Perenchio will assume Cisneros' duties for the near term. Cisneros joined the network in 1997.

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