It has been a long time since we had good news from the newspaper industry. But thanks to today’s upbeat figures from Gannett (NYSE:GCI), the industry is surging. Lee Enterprises (NYSE:LEE) has taken the lead.

There is a rare bit of good news for the newspaper industry this morning – and it’s a whopper!

Share prices across the downtrodden sector are soaring today thanks to word from Gannett (NYSE:GCI) that the company expects to handily beat its third-quarter earnings projections.

Gannett told its investors today to expect per share earnings (after one-time costs) in the range of 39 cents to 42 cents when the company releases its latest quarterly figures on October 19.

Before the press release, estimates pegged the figure at 28 cents per share.

Not surprising, the increase is not due to a sudden increase in subscriptions or advertising revenue. Instead, a reduction in paper costs and operational cutbacks are at work.

The news has sent shares of the $2.7 billion publisher up by more than 15%. Meanwhile, firms like the New York Times (NYSE:NYT) and Journal Communications (NYSE:JRN) are up by more than 5%.

But the industry’s big winner is Lee Enterprises (NYSE:LEE), with shares of the small cap soaring by nearly 60% on the bullish news.

Piggyback Profits

The high-flying action makes Lee an interesting stock to watch over the next few weeks, especially as third-quarter earnings figures begin to roll onto the Street.

With short-term debt of over $1.3 billion and a cash pile a mere fraction of its upcoming obligations, it is no wonder Lee’s shareholders are eager to sell at current levels. They may not get another shot.

If the company is to survive, it is going to spend a lot of time restructuring its current capital structure.

There is a good chance today’s optimistic news will be the catalyst that brings the company’s debt owners to the table in an effort to extend credit deadlines. It certainly helps to prove the newspaper industry is not dead just yet.

If you are thinking about making a move, don’t jump into the fire today. Wait for shares to give back some of the quick-found gains. More importantly, hold out for positive restructuring news or other material information.

Lee has a shot at success. Gannett’s news proves it is possible. But there is likely to be plenty of volatility ahead as the company fights to shed the dangerous weight of immense debt.

We got a rare bit of good news this morning. But will it become a trend? We’ll find out soon enough.

Source: No bailout Needed: Good News from The Rags