Torstar Corp. (TORSF.PK) shares were down more than 9% Wednesday after the company reported disappointing first quarter results.

The company said earnings in the quarter hit C40.09 per share, which is well below consensus estimates that called for C$0.22 per share. Earnings before interest taxes, depreciation and amortization, meanwhile, dropped 25% year-over-year.

The company also said it will hold on to Transit TV, after IdeaCast failed to exercise its option to buy it. Transit TV lost C$6.5-million in EBITDA in 2007.

Despite the poor showing, Torstar put on a brave face, saying the quarter is not indicative of its full-year outlook but Genuity Capital Markets analyst Carl Bayard wasn't buying it.

In a note to clients he said:

We do not share their opinion that this won't last. With newsprint costs rising, the Ontario economy struggling, and Torstar holding on to a loss-making division it was hoping to divest , we do not see how Torstar can be so confident about its growth prospects in quarters to come.

Mr. Bayard downgraded his rating on Torstar shares from "hold" to "sell," and reduced his price target from C$15 to C$19.50.

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