Pearson Ups Full Year Guidance

Last weeks positive results for McGraw Hill were said to bode well for Pearson's upcoming report and the news was confirmed this morning with Pearson reporting underlying revenues up 6% and operating profit up 20% for the first nine months versus the same period last year. Results including the impact of acqusitions and currency were 4% and and 17% respectively. From the press release:

Marjorie Scardino, chief executive, said: "We still have a lot of trading ahead of us, but every part of the company is doing well. We're benefiting from rapid take-up of our learning technologies; sustained increases in our audience and advertising at the FT; and bestselling publishing combined with operating efficiency at Penguin. This increases our confidence that 2007 will be another year of record profits for Pearson."

For the full year, the company is firing on all cylinders and is expected to achieve record performance in revenue, operating profit, cash flow and return on equity. The company is generally conservative in forecasting full year results but the confirm that all operating units are performing at or above their previous full year guidance.

Highlights for the first nine months of 2007:

Pearson Education underlying sales up 7% with good growth in all parts:

• Our School business: Sales up 7% from sustained investment in content and technology and breadth in publishing, testing and services. Full-year sales growth around the top end of the 4-6% range and further margin improvement is expected even after reorganisation costs.
• Our Higher Education business performed strongly through the start of the academic year. Sales are up 5%, with rapid growth in subjects where we offer our online teaching and assessment programmes (established services such as MyMathLab, MyEconLab and Mastering Physics as well as new programmes in Spanish, nursing and information technology).
• More than 1.3 million US College students registered for our online learning programmes in the August and September back-to-school period, a 44% increase on the same period last year.
• We now expect our worldwide Higher Education business to achieve full year sales growth around the top end of the 3-5% range with stable margins.
• Our Professional education business continues to show strong growth. Sales are up 12% in the first nine months, and we now expect full-year sales growth of 8-10% (against our previous guidance of 5-7%) with further margin improvement.

In FT Publishing,

• Sales are up 8% overall, with increasing content revenues. Our advertising revenues are up 9% in the first nine months (up from 7% growth in the first six months of the year).
• We continue to expect FT Publishing to achieve double digit margins in 2007.

Penguin sales

• Up 2% with a strong publishing performance from both new and established authors including Alan Greenspan (The Age of Turbulence), Khaled Hosseini (A Thousand Splendid Suns), Jamie Oliver (Jamie at Home) and Elizabeth Gilbert (Eat, Pray, Love). For the full year we continue to expect Penguin to improve margins further, as our publishing investment and efficiency programmes bear fruit.

Pearson Press Release

McGraw Hill Third Quarter Strong

MGH continued to delivery strong financial results on the back of their strong start to the year. In the third quarter revenues up over 9.8% to $2.2billion. Net income for the third quarter grew by 18.2% to $452.0 million. Foreign exchange rates positively affected the growth of revenue by $21.3 million and contributed $1.8 million to operating profit. From the press release,

"Double-digit growth and increased share in the elementary-high school market in
the most important quarter of the year for education and solid performances in Financial Services even as the structured finance market deteriorated were key to our results," said Harold McGraw III, chairman, president and chief executive officer of The McGraw-Hill Companies. "The operating margin expanded in all
three segments."

Net income for the first nine months was $872.9 million. and Revenue for the first nine months grew by 11.6% to $5.2 billion. Commenting on the outlook for the balance of the year the company stated:

"We are still on course to produce double-digit earnings per share growth in 2007, as well as improved operating margins in the Financial Services and McGraw-Hill Education segments. For the fourth quarter, revenues and earnings will not match last year's results because of challenging conditions in the structured finance market and some softness in education."

Highlights:

Education:

• Revenue for the McGraw-Hill School Education Group increased 11.2% in the third quarter to $670.8 million.
• Revenue for the McGraw-Hill Higher Education, Professional and International Group grew by 8.1% in the third quarter to $505.1 million
• Capturing 32% of the fast-growing state new adoption market was the key to this year's industry-leading performance by the McGraw-Hill School Education Group
• In professional markets, digital products, which include Access Medicine, Access Surgery, Access Emergency Medicine and Access Pharmacy, continue to attract a growing number of domestic and international subscribers. Our new digital iSpeak products, launched in April and now available in seven languages, are gaining traction

Financial Services:

• "Revenue for this segment increased 12.5% in the third quarter to $759.6 million compared to the same period last year.
• Operating profit grew by 17.3% to $346.7 million. Foreign exchange rates positively affected revenue growth by $12.6 million and had an immaterial impact on operating profit growth.
• Double-digit growth in Standard & Poor's international fixed income markets, a strong performance by corporate and government ratings, and outstanding results from financial information products and services offset growing weakness in structured finance
• "Standard & Poor's data and information products and index services recorded solid gains. Increasing assets under management in exchange-traded funds, stepped up trading volume of derivative contracts, and growth in licensing fees, all linked to Standard & Poor's indices, contributed to the improvement.
• "Strong demand for data and information products is spurring growth. Capital IQ continues to add new customers and expand services to existing clients. A primary revenue driver has been the addition of new modules to the Capital IQ platform, including portfolio management tools and detailed fixed income information.

Information & Media:

• Revenue for this segment increased 2.1% in the third quarter to $252.4 million compared to the same period last year.
• Operating profit grew by 35.8% to $18.6 million. In the third quarter of 2006, the segment incurred a pre-tax restructuring charge of $5.8 million.
• Foreign exchange rates did not have a material effect on revenue or operating profit growth.

Full press release
Powerpoint

Identifying My Package

As publishers we remain committed to defining for our readers and users the ‘package’. At the Frankfurt supply chain meeting last week as I listened to another “history of the ISBN” and other bedtime stories I was stuck by our insistence as publishers to define for our customers just how they should consume our content. This was manifested in our approach to identifiers for segments of content. I include myself in this criticism as a proponent of ISBN, DOI, ISTC and other alphabet defying groupings over the past 10 years. Three or more years ago, I think we were on the right track but in today’s user defined world the consumer is telling us what parts they want to consume and we will need to come up with easy to use flexible solutions that can identify the content and use.

On the Exact Editions site a user can select, by highlighting, a piece of text they want to use from any number of the journals and magazines hosted by EE. (The tool is named The Clipper). It is a fun and useful tool but in its implementation it doesn’t restrict the user in any way (other than a limitation on the amount of content). If a similar solution were implemented in a research context (within Refworks for example) I would like to see a persistent identifier created on the spot who’s syntax could be partially defined by the user. This is a perfect implementation for a DOI (one of the few perhaps) that enables the user to select a segment of the content they want, makes it persistent, creates a record for the publisher and enables any necessary reporting to take place.

It would seem to me that formatting a programmatic standard syntax to represent paragraphs, chapters, images etc. is a backwards approach simply because we will never fully anticipate how our users will use the content. We also continue to use the printed page as a construct which is fast diminishing in the online context and further undercuts the current standards approach. Attempts to build out a standard by unilaterally assigning executable identifiers to works (books) will be a waste of time and I simply don’t see the benefit of this approach; moreover, I don’t see anyone paying for it. It is not even clear publishers would welcome this approach.

Several implementations of technology that places at the point of need an easy to use script has proven that users want and are willing to purchase or gain approval for the use of content. CCC and O’Reilly are two differing examples of this concept. In the same manner, enabling an easy to use [citation] solution that provides a user with a simple pop-up window tied to the content they are interested in is a far more flexible and appropriate solution to identifying content. Avoid proscriptions: Let the user decide.

Amazon to Loose "One-Click"?

From my Aussie stringer, the Sydney Morning Herald has an article this morning on a New Zealander called Peter Calveley. Peter has been engaged in what is becoming a sport of sorts for dedicated people, crank-heads and other patent crusaders who seek to challenge existing patents for various technical solutions and products. In this case, he has waged a long battle over Amazon.com's famous 1-Click patent, a process that enables online shoppers to buy goods with the single click of a mouse button. From the news report:

In response to Calveley's request to re-examine the intellectual property, the US Patents and Trademarks Office (USPTO) has just handed down a decision
rejecting all but five of Amazon's 26 claims to the patent. The Patent Office agreed with Calveley's claim that processes similar to the 1-Click solution had been documented before the Amazon patent was lodged in 1997. Eight of Amazon's 26 intellectual property claims were dismissed because of a Newsweek magazine article entitled The End of Money?. It was published in 1995 - two years before the 1-Click patent was lodged. The article described a process where someone could click a button to pay for "an annotated bibliography of every article ever written about Sandra Bullock" and download the file.

Naturally, Amazon.com are not giving up so easily and can opt to appeal or take the case to the civil courts. As for now, the decision has been posted on the USPTO website but don't go adding 'one click' to your transaction module just yet.

Booker Short List is Free

The Times Online is reporting that the MAN Booker prize short listed titles will be made available for free download. Apparently the initiative is well advanced but what I really thought interesting was this statement:

The downloads will not impact on sales, it is thought. If readers like a novel tasted on the internet, they may just be inspired to buy the actual book.

Hummm. I must be missing something because while some forward thinking people in the industry subscribe to this theory it is by no means universally held. In fact I laughed when I read it. Surely, if free downloads were a promotional vehicle there would be more (all) of them.

Also, in one sweep the publisher disparaged the sales data in Nielsen's bookscan product by suggesting that the sales units of the Booker winner documented in the Nielsen reports were only 10% of the actual total. (Me thinks they are counting in Cusslers). The writer goes on to say that winning will do wonders for sales of the title - breathlessly, "Enright’s sales may now quadruple, at least". Gosh, is that an extra 12,000 units?

Lulu Name New President

Lulu.com the self-publishing juggernaut announced the appointment of Bryce Boothby Jr. as President and COO of Lulu Enterprises. Boothby, 57, will oversee all finance, engineering, and business at Lulu.com as well as Gnack, the Lulu Enterprises company that provides support and services for open media businesses.

From the press release:

"We are very excited to have an executive of Bryce's caliber joining the company," said Lulu Founder and CEO Bob Young. "Because of our rapid growth we must prepare our company to serve millions of customers. Bryce's experience and remarkable track record of success will ensure Lulu's ability to continue to scale rapidly into the future."

Boothby appears to have no direct publishing experience other than a stint at Quebecor in the 1990's. He does have strong manufacturing, process and technology experience which should give you a sense as to where the publishing industry is headed.

Sommers Named President of Gale

Pat Sommers who until recently was President & CEO of Sirsi/Dynix has been named as the new President of Gale Reference. He replaces Gordon Macomber who announced last week that he was leaving for Wolters Kluwer Education. Sommers will report directly to Cengage CEO Ron Dunn. From the press release:

"Pat Sommers is extremely well qualified to lead Gale. He has anoutstanding record of success in managing information service businesses,and I am confident that he will provide strong leadership to help Gale growand further solidify its position as the world's premier library referenceinformation business," said Mr. Dunn. "I am delighted to welcome Pat toCengage Learning and look forward to working with him to provideoutstanding products and services for Gale's customers."

He starts Monday.

Press Release.