Sacramento-based McClatchy Co. on Tuesday announced a surge in second-quarter earnings following the latest round of company-wide downsizing.

More cutbacks are still in the works to staunch a continued loss in revenue. Next week, members of the editorial employee union at The Sacramento Bee, the company's flagship, will vote on a proposal to use accrued vacation days rather than face unpaid furloughs this year.

However, a small amount of hiring is still taking place.

Net quarterly profit rose to $42.2 million, up from $19.7 million in the second quarter of 2008. Per-share earnings grew to 50 cents, up from 24 cents for the same period last year, according to the report released Tuesday by McClatchy.

The news was met with a spike in the value of McClatchy stock, which leveled off at 74 cents a share — up 20 cents — by the close of trading on the New York Stock Exchange Tuesday.

The "hard work" of restructuring and cutting expenses has led to the earnings growth in the midst of the recession and turbulence in the newspaper industry, according to Gary Pruitt, McClatchy's chairman and chief executive officer.

"Our challenge in this extremely tough environment is to stabilize cash flow, reduce debt and continue a transition to an integrated multimedia company," he said.

"Looking ahead, we know that economic slowdowns do not last forever, and our 152-year-old company has been successful by taking a long-term view and staying true to our strategic plan," he said. "We are working to put ourselves in a good position to weather this downturn and to create value for all of our stakeholders."

Second-quarter revenues dropped to $365.3 million, a 25.4 percent decrease from 2008's $489.7 million. Although ad revenue of $283.7 million marked a 30 percent decrease since this time last year, the loss of ad revenue this year has been slowing slightly since at least April.

The growth in earnings followed a 15 percent workforce reduction in the spring. McClatchy had already cut more than 4,000 positions, or a third of its employees, in about a year.

McClatchy currently owns 30 daily papers and dozens of non-dailies, among other interests. In May, the Bee lost 128 positions, including 29 in the newsroom, or 11 percent of its workforce, said Pam Dinsmore, the paper's community affairs director.

The paper has been able to make a few hires, including eight people in advertising and a new business editor, she said. The ad positions had been cut, and those who left were contacted about the jobs.

Someone also has been hired to fill a capitol bureau opening, and the paper's attempting to replace an opinion editor, said reporter Ed Fletcher, who chairs the Bee's Newspaper Guild unit.

In another move that could offset expenses, the paper has entertained an offer to buy its two-level parking garage after someone approached the Bee. No deal was made on the structure, which was built to allow additions for office space or other uses. But management would consider other offers, she said, adding that selling the garage isn't part of any cost-cutting plans.

"It's not like there's a for-sale sign out there," Dinsmore said.

Employees, including the entire features staff, have been moved from the newspaper headquarter's third floor to the second floor. Management has talked about using the third floor as a conference center for staff. Dinsmore said she hasn't heard anything about the possibility of leasing the third floor out to someone.

The Bee is now opening up its Eleanor McClatchy Center — known to employees as "the Bee Hive" — to neighborhood and community groups free of charge. The center holds an 80-seat theater and a conference room.

The Bee is considering additional cost savings. Guild members have agreed to vote next week on "vacation burn down," or using all vacation they earn in the next six months, as well as five more days of vacation accrued previously — and all by the end of the year. Bee management said such an agreement would prevent a week of unpaid furlough days, Fletcher said.

If the union agrees, everyone else at the paper will get the same deal, including management, he said. The Guild contract expires at the end of the year. In the last few months, all employees also have taken 6 percent pay cuts, and the Bee has capped pension plans at current levels and frozen 401K matching.

"I would say higher profits are good. But it would feel a lot better if it didn't come on the backs of workers who didn't have to take paycuts or see their 401K plans obliterated," said Fletcher.

Staff cuts have impacted the newsroom's climate as well as coverage. Editorial staff were cut from features, sports and the metro section, and regional coverage was the biggest loser, Fletcher said.

Reporters don't have as much time for investigative stories, Fletcher said. Many reporters and editors' assignments have changed in recent months. The movie critic is now covering general features and entertainment, including music reviews. The TV critic writes a new wine column.

Layoffs have stopped. But people are still leaving the paper on their own.

"People aren't real sure about whether the jobs will be there a year from now, or two years from now, or three years from now," he said. "Morale has bounced back slightly. But there are a lot of people looking over their shoulder or looking for work."

Suzanne Hurt is a staff reporter for The Sacramento Press. She can be reached at 916-804-2856 or suzanne@sacramentopress.com.