Gannett Co. (GCI) swung to a second-quarter profit amid aggressive cost cuts, but operating results at the nation's largest newspaper publisher continued to weaken sharply.

The company's earnings results far exceeded expectations on Wall Street on Wednesday, propelling its shares to double-digit percentage gains. However, its top-line results came in lower than forecasts, and the company's overall valuation remains just a quarter of what it was a year ago.

"They did a great job at managing expenses, but the core business is still pretty weak," said Ed Atorino, analyst at Benchmark Co.

Gannett has been aggressively cutting costs in the past year or so, and earlier this month, it signaled more was needed. The company unveiled plans to cut 1,400 jobs from its work force of 41,500. The company, which owns more than 80 daily newspapers, including USA Today, had already cut about 10% of its work force last year.

Jobs and businesses are disappearing throughout the newspaper industry as it endures a slump that began long before the economic downturn came last year. On Wednesday, shares of other embattled publishers reacted positively to Gannett's earnings amid a broader rally in the stock market. Shares of McClatchy Co. (MNI) gained more than 26% to 53 cents, while the New York Times Co. (NYT) rose nearly 5%.

But it remains unclear how Gannett's results translate for other newspaper publishers, or if they reflect company-specific cost cuts. Gannett Chief Financial Officer Gracia C. Martore declined to say the ad market for publishers has bottomed out but did say "demand seems to be firming up a bit in some categories and in some geographic locations" and that the company sees more "bright spots" that bode well for the second half of the year.

Gannett's second-quarter ad revenue declined 32% at its publishing division, marking an improvement from the 34% decline it recorded in its first quarter, and the company's executives said June was its strongest advertising month so far this year.

Robert Dickey, president of Gannett's U.S. Community Publishing segment, said he has a more positive outlook for the second half of the year, noting that just in the last few weeks, local advertisers have shown a new willingness to commit to deals.

"The business seems to be getting less worse," Morningstar analyst Tom Corbett said, "but it's still very difficult for a company like this to keep costs in line with revenue declines of this magnitude."

"They're coping with the ad market downturn the best they can, but at the end of day, cost cuts are a survival mechanism -- not a buy signal."

CFO Martore is serving as Gannett's principal executive while chairman and chief executive Craig Dubow is on medical leave.

"Craig is doing well and his recuperation is progressing," she said.

Gannett announced last month that Dubow would be taking an extended medical leave, expected to last four months, for a second round of back surgery to treat an undisclosed, spine-related ailment.

For the quarter, Gannett reported a profit of $70.5 million, or 30 cents a share, compared with a prior-year loss of $2.29 billion, or $10.03 a share, which resulted from a big write-down. Excluding items, per-share earnings slumped to 46 cents from $1.04 but easily beat the average analyst estimate of 36 cents.

The better-than-expected earnings lifted Gannett shares 27% to $4.44. The stock, though, remains well below its 52-week high of $21.68 from last August and the $8 mark where it started 2009.

Revenue decreased 18% to $1.41 billion, falling short of the Thomson Reuters estimate of $1.46 billion.

Print revenue dropped 26%, while broadcasting reported a 21% decline. Retransmission revenue at its broadcast business, which comes from carriage fees paid to it by pay-TV distributors, tripled and helped to offset the weak auto advertising demand and lower political spending that is plaguing local broadcasters across the country.

Gannett's closely watched digital business posted a 84% gain in pro forma operating profits after the consolidation of CareerBuilder and ShopLocal, but the gain came largely from a 25% decline in operating expenses. Operating revenue for the segment fell 18.5% on a pro forma basis.

The company also has worked to restructure its $3.5 billion debt load, leaving it with no debt maturities on the horizon for nearly two years. Martore said she's confident the company can meet its obligations to lenders.

-By Nat Worden, Dow Jones Newswires; (212) 416-2472; nat.worden@dowjones.com