• Barron's, Wednesday, June 28, 2006 11 AM

Sex may sell, but in Playboy Enterprises' case, that doesn't apply to its stock, reports Andrew Bary of Barron's, who points out the shares have actually lost ground since going public in 1971. The company is bedeviled by losses at its flagship magazine, competitive pressures in the U.S. TV business and the proliferation of porn, Forbes notes, but it still has some fans. "Playboy has a wonderful franchise and brand," says Mark Boyar, head of an eponymous New York investment firm that owns some of the stock. "I don't think there's a single global media company with such a small market value." And with that low value, along with its modest debt levels, understated earnings and global brand recognition, Playboy could be taken private by management or private-equity investors who think they might be able to run it cheaper than current CEO Christie Hefner. Corporate overhead runs about $25 million annually, or 7 percent of projected revenue, whereas most media companies keep that down to about 2 percent. For her part, Hefner says the company isn't for sale and that its expense base is "about right" and is part of the price of being a small, diversified media conglomerate.

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