MNI lost $4B in value in 2 years

McClatchy’s staggering writeoff of nearly $1.4 billion in the value of its assets pales in comparison to the $4 billion drop its stock has suffered in just two years. That’s a decline, by the way, of 75.5%.

As expected, MNI was forced by the conventions of public accounting to deduct from its third-quarter earnings an amount equal to the theoretical decline in the value of the former Knight Ridder newspapers it bought for $4 billion in mid-2006.

The nearly $1.4 billion in accounting adjustments put the book value of the KRI properties at roughly two-thirds of what McClatchy paid for them 16 months ago.

But these calculations, which are properly aimed at complying with the arcane rules of accounting, understate the true loss a McClatchy shareholder would have suffered if she owned the stock since this time in 2005.

As you can see from the graph below, MNI’s stock has plunged to $15.87 a share yesterday from $64.78 on Nov. 8, 2005. That's roughly when the company began pursuing the KRI deal in what, ironically, turned out to be the last of the salad days for the newspaper business.

If you multiply the decline in the stock price by the company’s 82.1 million publicly traded shares, you will see that $4 billion in real shareholder value has gone up in smoke.