Updated from 11:23 a.m. EST

Though the company recorded a massive writedown on its business in New England, New York Times ( NYT) managed to beat Wall Street's expectations with its fourth-quarter operating results.

Excluding the writedown, the publishing empire's earnings for the quarter rose 39% to $87.9 million, or 61 cents a share. Analysts polled by Thomson Financial projected earnings of 46 cents a share.

Shares climbed 21 cents, or 1%, to $23.11 Wednesday.

At least one analyst viewed the results as a sign that the company's profit decline of recent years may be nearing a bottom, which would make the stock an attractive value.

"It was a better-than-expected quarter," says Benchmark Research analyst Ed Atorino. "The Times is going to see better numbers as the strength of its brand starts to pay off with the growth in online and the cost-cutting."

That is, with one caveat: The Boston Globe, says Atorino, remains a "wild card."

In tech-savvy New England, The Globe has been hit especially hard by the rise of the Internet as a source for information. Meanwhile, the New England real estate market has cooled and major retailers in the area have consolidated, putting a damper on ad revenue. As a result, the venerable newspaper has morphed into New York Times' worst-performing asset.

For the fourth quarter, the company took a writedown on its New England media business totaling 735.9 million, or $5.11 a share. The charge put its bottom line deep in the red with a loss of $648 million, or $4.50 a share, compared with a year-earlier profit of $63.2 million, or 43 cents a share.

" The Globe's performance was ugly, but there are some circumstances out there with new stores and malls coming into Boston that could help the situation," says Atorino. "It's very possible that they will hit a bottom in terms of circulation and get a core base and start to see an uptick in advertising and a strong online performance."

If such sentiments prove correct, the Gray Lady's staunch refusal to consider a sale of The Globe could be vindicated.

Last year, former General Electric ( GE) CEO Jack Welch reportedly floated an offer to buy The Globe, which New York Times rebuffed. The Times has maintained that a sale would be short-sighted and that the dismal outlook for the newspaper industry will improve as the transition wrought by the Internet runs its course.

On a conference call with analysts following the earnings release, New York Times CEO Janet Robinson told analysts that The Globe remains an important to the company that can contribute to growth overtime.

Recently, the company announced plans to cut about 125 jobs in the New England business, including some newsroom positions at The Boston Globe. It has also shuttered the newspaper's foreign bureaus.

In the fourth quarter, New York Times' revenue climbed 4.3% to $931.5 million from $893.1 million, topping Wall Street's target of $903.9 million. Ad revenue increased 1.6%, while circulation revenue increased 7.7%. Excluding the additional week, however, ad revenue declined 3.7%, while circulation revenue rose 0.7%.

Internet revenue continued to be a bright spot, climbing 42% for the quarter to $84.8 million from $59.7 million in the year-ago period. The company said it's currently in negotiations with Internet giants like Google ( GOOG) and Yahoo! ( YHOO) about partnerships to expand its digital revenue stream.

New York also saw better-than-anticipated overall revenue growth in December. During the month, revenue climbed 18.9%, buoyed by an additional week in the reporting period. Excluding the extra week, total revenue would have increased 0.5%.

Looking ahead, the company said that the January print advertising remains "challenging." For 2007, the company expects advertising rates for The New York Times and the regional newspapers will increase in the low-single digits, and will be flat to slightly up at The Globe.

New York Times also said it is restating previously issued financial statements due to reporting errors primarily relating to pension and benefits plans established with union agreements.

The restatement wasn't material from an income and cash flows statement perspective, New York Times said, but it did affect the balance sheet. The company estimates that as of Dec. 25, 2005, assets will increase approximately $30 million, liabilities will increase roughly $100 million and stockholders' equity will fall by about $70 million.

"This could be a turnaround story in the making," says Atorino. "I wouldn't bet on the first quarter, maybe not even the first half, but later in 2007 and 2008, things could get very interesting."