With this warning, delivered April 14, McClatchy approaches the nadir of its spectacular fall from grace, a tragic arc that began three years ago with its acquisition of Knight-Ridder.

According to usual NYSE practices, McClatchy may obtain a grace period of 18 months in which to bolster its share value above the $1.00 threshold. That depends, however, on it setting forth a convincing plan to the NYSE office in the next 45 days. If the NYSE officials reject the plan, NYSE will be de-listed from the exchange soon thereafter, at which point it will trade among the "penny stocks" of the "pink sheets."

The NYSE is fairly accommodating in these situations if officials believe there is a real prospect for recovery -- but it will not hesitate to give hopeless companies the boot. In March, NYSE officials rejected a price recovery plan proposed by Citadel Broadcasting, which was then de-listed on March 6. The Journal Register Co. was de-listed by the NYSE last year, and it entered Chapter 11 bankruptcy in late February.

Like McClatchy, Citadel's and Journal Register Co.'s financial and stock woes have come close on the heels of a major acquisition -- the $2 billion purchase of ABC Radio in June 2006, in the case of Citadel, and an ill-advised buying spree beginning in the 1990s in the case of Journal. These highly leveraged transactions turned out to be poorly timed -- as did McClatchy's $4.5 billion acquisition of Knight Ridder that same year.

From about $40 per share in 2000, McClatchy's stock price rose to a high of $76.50 in March 2005 -- but then began to tumble. In 2007, it traded below $10, and at the close of the market on Friday, it was trading at $0.58. That means McClatchy's market capitalization has fallen from about $2.5 billion in March 2005 to $52.4 million today.

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