New York Times beats profit forecast; shares rise (Reuters) - New York Times Co (NYT.N) reported a better-than-expected profit on Thursday as investors brushed past the company's drop in print and digital advertising revenue and focused more on the company's ability to manage costs. Its shares rose 4.7 percent to $6.42 in morning trading. Evercore Partners analysts Doug Arthur said that with $431 million of cash, the New York Times should initiate a dividend. "They have to be the only company with this much cash not paying a dividend," he said. The New York Times suspended its dividend in 2009. Excluding severance and special items, first-quarter earnings per share were 8 cents, blowing past analysts estimates of 2 cents, according to Thomson Reuters I/B/E/S. The New York Times has been without a chief executive since Janet Robinson stepped down at the end of last year and received a total payout of $24 million. New York Times Chairman Arthur Sulzberger Jr. has been serving as the company's chief executive for the last four months. Sulzberger highlighted the company's digital strategy and increase in circulation revenue -- up 10 percent during the quarter. Last year, the New York Times launched a digital pay model at its flagship property, a closely watched experiment by other newspaper executives eager to find new revenue amid sinking ad sales and dwindling print subscriptions. The company said it had 454,000 paid digital subscribers as of March 18, up 16 percent since the end of the fourth quarter and that it was decreasing the number of free articles readers can view to 10 from 20. Even so, pressure on advertising sales remains a challenge for the newspaper industry. Advertising revenue decreased 8.1 percent, while digital ad revenue declined 10.3 percent mainly because of troubles at the About Group. Sulzberger pointed to an "uneven economic environment" for the drop in advertising sales noting that digital advertising was also "under pressure." The New York Times' results follow those of Gannett, the largest newspaper chain in the United States by circulation. Gannett said on Monday that newspaper ad revenue fell more than 8 percent, sending its shares down about 7 percent. About.com -- the website that provides expert answers that tends to appear high in search queries and sells advertising against those results -- dragged down the company's digital revenue with a drop of 23.1 percent to $23.9 million. Total first-quarter revenue was $499.4 million, down 0.3 percent. Analysts' forecast for the first quarter was $500 million. Reporting By Jennifer Saba; Editing by Gerald E. McCormick and Maureen Bavdek