Q. If a share price has halved in just over two years, how much further can it fall?

A. Significantly

Seven West Media (SWM) reported a further slip in profit, and a horrible revenue and earnings outlook. Investors responded with an 18% trouncing of its shares.  While this may be a case of lowering market expectations in a bid to outperform the lower bar, SWM may have miscalculated concerns about its overall strategy.

SWM’s main business is its free to air TV, radio stations, Perth newspapers, magazines and community newspapers. Old, old media. This is surprising, because not only does Seven have a long standing association with Yahoo, and a recent foray into subscription video with Foxtel, it has developed online support for much of its existing media.

Yet the bottom line says the transition to new media is not delivering, and is looking increasingly like lip service to investor concerns. A kinder, alternative explanation is that SWM is poised to capitalise on an upswing in the advertising cycle to juice up its structural transformation. Either way, the numbers say it isn’t working. It’s hard to see where SWM’s salvation will come from if the long awaited turn of the advertising cycle is further delayed.

Down, but not cheap yet.