For the Supply Chain Guy Who Has Everything

So adaptable and cheap are RFID tags that supply chain gurus are mailing them to themselves. This is a pretty cool idea noted in Pop Science described as "mail that never gets lost". While the title is not entirely accurate - it can still get lost but you will eventually know where it has been - the use of this technology is really quite practical. Just slap one of these puppies in an envelop and you can analyze your entire supply chain. The chip enables analysts to trace the location and time spent at each step of your process thereby giving you valuable information about blockages and bottlenecks. It could become a standard management tool used to monitor supply chains.

From the article:

The technology lets users track a letter’s every move. A vibration- and tilt-sensitive motion detector determines whether the Logger was sitting idle, being sorted, or bumping along in a truck. This data syncs with the GPS locations via Google Earth, allowing officials to spot places where mail lingered too long.

Jones'n for Truth

At Least Bulworth Was Funny

Remember the Warren Beatty movie where his character ends up in South Central LA basking in some street cred as he attempts to avoid an assassination plot (which he instigated). Well that has nothing to do with the latest fiction posing as non-fiction but at least the fictional movie made some strong and resonate points about politics and media. If you read, as I did, the profile of author Margaret B. Jones in The NYTimes last week you will have been mesmerized by the story of her life as a human castaway adopted by a foster family in South Central, running drugs for the bloods, learning to sleep on the floor every night to dodge bullets and then emerging to actually complete college and then end up marrying an ex-gang member.

Turns out (and it's getting so that we will need to change the sections in the bookstore) it is all fake. She's but a simple, upper middle class 30 something writer, with a very vivid imagination. From the LATimes:

The author of "Love and Consequences," a critically acclaimed autobiography about growing up among gangbangers in South Los Angeles, acknowledged Monday that she made up everything in her just-published book."Jones" is actually Margaret Seltzer. Instead of being a half-white, half-Native American who grew up in a foster home and once sold drugs for the Bloods street gang, she is a white woman who was raised with her biological family in Sherman Oaks and graduated from Campbell Hall, an exclusive private school in the San Fernando Valley.

Even in the face of complete disaster and shame (perhaps she understands that redemption in America is always just around the corner), it is interesting that her reaction and that of her recent fact-starved compatriots blend self-righteousness and penance. At the outset these writers seemed to have weighed the consequences and decided that they'll make a name for themselves either way; they seem to know that any news is good news and that the notoriety is in itself valuable. From the NYTimes:

Ms. Seltzer, 33, who is known as Peggy, admitted that the personal story she told in the book was entirely fabricated. She insisted, though, that many of the details in the book were based on the experiences of close friends she had met over the years while working to reduce gang violence in Los Angeles. “For whatever reason, I was really torn and I thought it was my opportunity to put a voice to people who people don’t listen to,” Ms. Seltzer said. “I was in a position where at one point people said you should speak for us because nobody else is going to let us in to talk. Maybe it’s an ego thing — I don’t know. I just felt that there was good that I could do and there was no other way that someone would listen to it.”

Are all the books fakes? I'm going to start my memoir: In it I'm Howard Hughes, mixed with Archie Leach, Basil Fawlty, Biggles and Roy of the Rovers.

Barnes & Noble Launches Studio

Barnes & Noble announced the launch of a multimedia site on B&N.com that will feature a range of original content about books, readers and writers, and showcase web video series and other multimedia content about varied aspects of literature, complemented by user-generated material. Barnes & Noble Studio will launch with Barnes & Noble Tagged! and Book Obsessed as the first in a series of original productions and content initiatives.

From the press release:

Barnes & Noble Tagged!, hosted by Molly Pesce, is a magazine-style weekly web series that takes an upbeat look at what’s happening in the book world. The five-minute weekly show will let book-loving viewers know what new titles to look out for and will reveal the stories behind recent book news. The show will also feature an interactive poll where viewers can cast their vote on the chosen topic of the week. Ms. Pesce is a book lover herself with a penchant for real-life adventure books. She is currently writing her own account of modern motherhood and will be familiar to viewers from her role as the host of shows on Animal Planet and NBC’s iVillage Live. The program is produced for Barnes & Noble by Allen/Nee Productions.

Book Obsessed takes a five-minute look at passionate readers and their world through the books they love. The first episode in the weekly documentary-style series spends a day at the home of Laurie Gold of Dallas, Texas, who loves romance novels – and only romance novels. The second episode features Joe Perlman, a man who has a mere 35,000 books in his Long Island home. The third features a married couple that met at a mystery novel convention. To complement these portraits of book aficionados, Barnes & Noble Studio will invite viewers to upload short videos about their own book obsessions for inclusion into the Book Obsessed channel. Submissions can be made starting March 10. Book Obsessed is produced for Barnes & Noble by City Lights Media and is shot on location around the USA.

The company states that at launch there will be approximately 700 video and audio pieces on the site and that the new slate of programming will join the already considerable content on the B&N site. This existing content includes interviews and live in-store presentations from stores around the country.

Pearson Post Record Results

Pearson shares fell this morning despite posting financial gains across the board. The company increased top line revenues by 6% to £4.2bn and adjusted operating profit by 14% to a record £634m. The profit increase was supported by all segments of the Pearson group with Pearson Education up 9%, Penguin up 20% and the FT Group up 30%. Press release.

Investors are concerned that Pearson's results are weighted to reliance on the US market both in education and advertising revenues and as a result the company's share price fell despite the results. Pearson is generally conservative about forecasting their full year revenues and profits and underplay the impact of their acquisitions. If past year's performance is any indication the underlying businesses will continue to drive growth in excess of competition and the recently acquired companies/operations will further support growth. This is particularly the case in Education where the company has spent heavily in recent years. Additionally, across the company, management continues to transform revenues from annual one-off sales to subscription (i.e. recurring) based models. This supports annual revenue, profit and cash generation growth.

Typically (in recent years), the company sets aside £500m for acquisitions which enables them to acquire without dilution. With markets depressed it will be interesting to see how they are able to stretch this number during 2008.

Other highlights:

• The company spent £472m for 2007 acquisitions which added £90m of sales and £13m of operating profit to 2007 results
• The Government Solutions business was sold to Veritas Capital for $560m in cash, $40m in preferred stock and a 10% interest in the company
• The newspaper Les Echos was sold to LVMH for €240m in cash
• A 50% stake in FT Deutschland to Gruner + Jahr was sold (no terms noted)
• The Data Management (Scanners) business to M & F Worldwide Corp for $225m in early 2008

Their outlook for 2008.

• Penguin (20% of sales; 12% of operating profit) expects to improve margins further and into double digits. Penguin's good publishing and trading performance has continued into the early part of 2008.
• Higher Ed will continue to build on operating efficiencies and beneficial recent acquisitions. As in recent years they expect to grow 1-2% better than the industry
• In School the company expects the integration of Harcourt to progressively build margin improvement with material benefit to show in 2009
• At the FT, the company expects to continue to broaden their revenue base and continue to reduce the reliance of advertising revenues. Ad revenue is 30% of group revenues versus 52% in 2000.

Marjorie Scardino, chief executive, said: "This is another record set of results and an excellent performance from every part of Pearson. We continue to reshape Pearson into a more digital, more international and more efficient company, and those changes make us confident that 2008 will be another good year."

Harlequin Improved

Harlequin revenues were flat for the full year 2007 versus 2006. Revenues of $462mm versus $471mm in the prior period were negatively impacted by foreign currency which accounted for almost the entire variance. EBITDA showed some improvement with 2007 results of $65mm versus $63mm. Excluding the impact of Forex EBITDA was $6.3mm better than 2007.
From their press release:

Excluding the impact of For Ex:

• Overall Book Publishing revenues were down $1.0 million in 2007
• North America Retail revenues were up $3.6 million
• North America Direct-To-Consumer revenues were down $5.0 million
• Overseas were up $0.4 million
  
• Overall Book Publishing operating profits were up $6.3 million
• North America Retail operating profit was up $5.8 million
• North America Direct-To-Consumer operating profit was up $2.2 million
• Overseas operating profit was down $1.7million

The company has spoken about their efforts to manage expenses in the North American business and they seem to have made some impact in that direction with the improved operating margins. Additionally, the company was not beset by any unforeseen operating issues that bedeviled them in prior years (like the bankruptcy of a distributor). The company also said that improved sales via the internet - primarily direct to home - price increases and lower (presumably more effective) promotional spending also supported the better margin performance.

It appears the company is focusing now on improving their international operations which appear problematic. The company recently announced an expansion of their efforts in Indian, which is not material in their current results, but they must also look to improve results in Japan and the UK. In both these countries there appears to be a shift in how consumers interact with Harelquin (Mills & Boon) with decreases in direct to home in the UK as an example. The company will look to use their experience in the US to improve the UK market. In Japan the company is experimenting with Manga versions and mobile phone distribution but as yet these efforts have not been significant to offset the decline in core sales.

Press Release

Of note also, is that Torstar the corporate entity that owns Harlequin also posted solid results especially in light of the declines in newspaper properties. Torstar revenue of $1,546.5 million grew 1% and EBITDA of $225million grew 11.5%. The company stated that all their primary operating units performed well.

Informa Posts Strong Results

Chairman Peter Rigby has ruled out bidding for the trade magazine division of Reed Elsevier (Reed Business Information) saying the advertising business is not one they are in. The company did however post strong financial results that were in line with the expectations set in mid-December. The acquisition of Datamonitor which at the time seemed an expensive deal looks to have been integrated well and already producing impressive results. From their press release here are their highlights:

• Revenue £1.13 billion – 9% pro forma growth
• Adjusted operating profit £261.0m – 19% pro forma growth
• Adjusted operating margin rises above 23%
• Strong trading across all three divisions (Academic & Scientific, Professional and Commercial) and all three business streams (Publishing, Performance Improvement and Events)
• Datamonitor delivers 22% pro forma revenue growth for the full year
• Adjusted cash conversion 110% of adjusted operating profit
• Total dividend increases 39%
• Confident of 2008 outlook
• Academic and Scientific division grows adjusted operating profit by 25% to achieve a 29% margin
• Strong yield increases and drop through from electronic delivery
• Professional division benefits from Performance Improvement extending global reach
• Non-US revenues increase by 29%
• Commercial division growth fuelled by extension of Large Scale Events portfolio and 38% increase in Dubai revenues

Chairman Rigby: "We have transformed Informa in recent years. We have built a business based on recurring revenue streams which provides strong defensive qualities, but not at the expense of continuing good growth. We are of course aware of the current uncertainty in the financial markets, but at this point the board sees no signs in our trading to alter its expectations that Informa will deliver another strong performance in 2008. Our confidence in the future of the business is reflected by a 39% increase in the dividend over 2006."

Wolters Kluwer Reports Results

Wolters Kluwer appear to have completed a strategic transformation of their business which began more than three years ago as the current CEO Nancy McKinstry took up her role. The company did not see significant top line improvement in 2007 - up 4% - but they have gained in operating margin to 20% and with a better product mix they should continue to see improvement. During 2007, the company divested their education division and booked a nice gain (similar to Reed and Thomson in that respect).

In her comments, McKinstry noted that over half the companies revenues come from online and electronic products and services, and she believes improved results will derive from this better product mix. As the company continues to invest in work-flow solutions and integrated products she went on to say "I am confident in our ability to leverage our superior market positions, our improved organic growth and more efficient operating structure to achieve enhanced value to our customers and shareholders."

Other highlights from their press release:

• Organic revenue growth was 4% (2006: 3%)
• Reported revenues of €3,413 million, grew 6% in constant currencies (2006: €3,377 million)
• Ordinary EBITA margin improved to 20% (2006: 17%)
• Ordinary EBITA of €667 million increased 27% in constant currencies (2006: €556 million)
• Diluted ordinary EPS increased 25% to €1.38 (2006: €1.10), 35% in constant currencies
  Free cash flow of €405 million (2006: €399 million, which included a €53 million one-time tax refund)
• Revenues from online and workflow solutions grew 9%
• Structural cost savings of €161 million, an increase of 26% (2006: €128 million)
• Divestment of Education: sales price €774 million; book profit €595 million; net proceeds €665 million
• Share buy-back program completed (€645 million returned to shareholders)
• Net profit for the full year was €918 million (compared to 2006: €322 million), supported by he divestiture of the Education division