Playboy's Shares and Ad Revenue Drops

Adult entertainment company Playboy Enterprises Inc forecast a sharp decline in advertising revenue in the current quarter after posting a third-quarter loss, and its shares fell 27 percent.

Third-quarter revenue fell 15 percent to $70.4 million, partly because of Playboy's decision to sell its television studio assets and to outsource its e-commerce operations. Analysts on average were expecting revenue of $75.5 million, according to Reuters Estimates.

"The market's focusing on topline fundamentals, which were very poor in the quarter, and much worse than even the most pessimistic expectations," said David Miller, an analyst at Caris & Co in Los Angeles.

Playboy lost $1.3 million in its publishing division as revenue fell 6 percent to $21.8 million. It also expects a 17 percent decline in ad revenue in the fourth quarter compared to last year.

Like many magazine and newspaper publishers, Playboy has a brand name that is more widely known than read. Circulation has fallen as more people looking for adult entertainment and racier pictures of nude women turn to free sites online.