CALIFORNIA – Playboy’s stock, trading shy of $15 a share as of this article’s writing, was downgraded from “buy” to “neutral” by Bank of America Sec on Monday. Many analysts have pointed to concern over the company’s relatively flat revenues, and drops in both publishing revenue and circulation of the company’s flagship men’s magazine.On the flip side of the stock’s performance is some optimism over performance of the company’s entertainment sector – including subscription-based television programming and pay-per-view sales – which has grown by 8% over the first three quarters of the year. The strongest gains are being seen in foreign markets, where Playboy can look forward to recycling their domestic offerings at a minimal, if not trivial, added cost.

Add to Playboy’s international and entertainment segment growth the fact that company founder Hugh Hefner has purchased millions of dollars in Playboy stock recently (Hefner already owns a controlling majority of the shares), and there appears reason to suspect that Playboy’s future might be rosier than the Wall Street pundits are predicting.

Licensing is another division that has seen strong gains of late, with a 30% increase in licensing revenues through the first three quarters of 2005, and an increase in operating profits of 41%.

The reasons for the gloomy outlook some believe is in store for the revered brand all seem to be rooted in the performance of the company’s publishing unit – and the concern is easy to understand, given that the publishing unit still brings in close to a third of the company’s overall revenue. But how bleak is the outlook for the magazine, really?

Even though circulation of the magazine has dipped to approximately 3 million – well down from the magazine’s peak circulation of yesteryear – that is still sufficient to rank as the 19th largest circulation among US magazines, and tops among men’s and adult magazines. Plus, as some analysts have argued, the magazine’s most important function is to drive the Playboy brand, and that its importance as a profit generator is waning as the company adds and diversifies revenue streams.

So, while some analysts continue to focus on the fate of Playboy’s oldest product, it might be a good time for investors to consider some of the company’s newest offerings – the coming Playboy Tower at the Palms Resort and Casino, Playboy stores opening throughout Asian tourist destinations, and new markets for their pay-per-view movies throughout Europe.

In short, don’t count the Playboy bunny out yet; as with another marketing-device rabbit, this old hare may prove capable of going and going and going…