Management CommentaryWriting in the Guardian, Frederick Filloux doesn't quite "defend the agency model" more like the status quo:
"Growth in STMS and Global Education was partially offset by weakness in our Professional/Trade business. Unfavorable comparables to the prior year as a result of the bankruptcy of Borders in December 2010 weighed heavily on our Professional/Trade results this quarter," said Stephen M. Smith, President and CEO.
Mr. Smith continued, "After conducting a strategic review of the Professional/Trade business, we have decided to explore opportunities to divest several consumer print and digital publishing assets to focus on information and solutions for professionals and lifelong learners. To that end we recently acquired Inscape Holdings, a leading provider of workplace learning and assessment solutions. The acquisition will combine Wiley's valuable content and global reach in leadership and training with Inscape’s online assessment-delivery platforms, talent expertise and network of 1,700 independent consultants, trainers, and coaches."
"In STMS, we are encouraged by calendar year 2012 journal renewals, which are proceeding slightly better than expected. Book sales have been softer than we expected but most of our leading indicators are positive, including our society wins and online usage. Global Education showed modest growth this quarter."
"While the global economic environment remains difficult, we are very optimistic about the opportunities we see in research, professional development, and education. We are excited with our recent acquisition, which will allow us to provide content-enabled services in leadership and training, globally. And we are focused on reducing costs and improving efficiencies across the business."
Mr. Smith concluded, "Based on results for the first nine months and other leading indicators, we are maintaining our full year revenue guidance of low single-digit growth, excluding FX and our EPS guidance of $3.15 to $3.20, including FX and excluding the unusual tax benefits."
- Revenue growth of 1% including and excluding foreign exchange (or "FX")
- Revenue by segment, including FX: STMS +3%, P/T -6% and Education +2%
- Adjusted EPS grew 8% to $0.91, or 6% excluding FX. Growth was driven by top-line results, prudent expense management and lower interest expense and income taxes.
- Shared Services and Administrative Costs excluding FX, were up 3% to $91 million, driven principally by technology spending to support investments in digital products and infrastructure.
- Outlook: Reaffirming FY12 revenue guidance of low single-digit growth excluding FX and EPS guidance in a range from $3.15 to $3.20 including the effect of FX and excluding the unusual tax benefits.
- Acquisition: In February, Wiley acquired Inscape Holdings, a leading global provider of workplace learning solutions, for $85 million in cash. Inscape will be integrated into Wiley's Professional/Trade business where it will combine Wiley's extensive reservoir of valuable content and its global reach in leadership and training with Inscape's technology, distribution network, and talent expertise, including the innovative EPIC online assessment-delivery platform and an elite network of nearly 1,700 independent consultants, trainers, and coaches. Annually, Inscape generates approximately $20 million in revenue.
- Divestment: On March 7, 2012, Wiley announced that it intends to explore opportunities to sell a number of its consumer print and digital publishing assets in its Professional/Trade business as they no longer align with the company's long-term business strategy. Fiscal Year 2011 revenue associated with the assets to be sold was approximately $85 million with a direct contribution to profit, before shared-service expenses, of approximately $6 million. Assets include travel (including the well-known Frommer's brand), culinary, general interest, nautical, pets, crafts, Webster's New World, and CliffsNotes. Wiley will re-deploy resources in its Professional/Trade business to build on its global market-leading positions in business, finance, accounting, leadership, technology, architecture, psychology, education, and through the For Dummies brand.
- Share Repurchases: Wiley repurchased 520,000 shares this quarter at a cost of $23 million. The Company has 2.9 million authorized shares remaining in its program.
Pricing an item should be left to the one who produces it. The case of the book publishing industry is not as simple as, say, that of an appliance maker looking for the most potent retail channel for its hairdryers or toasters. The book sector is entering a painful transition: first, it needs to respond to consumers who want a large catalogue of inexpensive ebooks; second, there is a plateauing but still strong print market ($73bn worldwide). Managing a smooth decline for this segment is key to the industry's health, especially as the ebook market yields thinner margins. Legacy publishers are culturally ill-equipped for such a difficult transition; they now find themselves competing with the agile, cash-rich, data- and technology-driven players of the digital world.From Twitter:
The Amazon Paradox: Coming to Terms With Publishing's Colossus,by Peter Osnos | The Atlantic
Librarians Feel Sticker Shock as Prices for Random House Ebooks Rise 300 Percent - http://goo.gl/2vYex