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April 25- April 30, 2011 Edition McGraw-Hill Digital Grows in First Quarter
NEW YORK, NY/April 26, 2011–The McGraw-Hill Companies today reported a 16.2% increase in net income to $120.0 million for the first quarter of 2011. Revenue grew by 7.7% in the first quarter to $1.3 billion.
“A promising year is off to a solid start,” said Harold McGraw III, Chairman, President and Chief Executive Officer of The McGraw-Hill Companies. “We have started to realize the value of our newest segment, McGraw-Hill Financial, which produced strong growth and margin expansion in the first quarter. Significantly, we were able to achieve a solid increase in first quarter earnings while making investments to build on our growing digital presence in education and position Standard & Poor’s for stronger profit growth for the balance of the year.”
In the professional publishing division, double-digit growth for digital products and services were offset by lackluster results in the traditional retail channel.
The best-selling e-books from professional publishing during the first quarter of 2011 were:
Educational Testing Service, The Official Guide to the TOEFL Fabozzi, The Handbook of Fixed Income Securities Patterson, Grenny, McMillan, Switzler, Crucial Conversations McPhee, Papadakis, Rabow, Current Medical Diagnosis and Treatment 2011, 50th Edition Lowndes, How to Talk to Anyone, 2nd Edition
Revenue declined in international markets primarily as a result of shortfalls in the Middle East and Africa that were related to unsettled conditions in key countries within the region in the first quarter.
Education: Revenue for this segment decreased by 4.6% to $302.7 million in the first quarter of 2011 compared to the same period last year. The operating loss increased by 22.2% to $75.5 million, reflecting the decline in revenue and ramped up investments for digital infrastructure and product development. Foreign exchange rates added $2.6 million to the operating loss for the first quarter.
The McGraw-Hill School Education Group’s revenue declined by 4.8% to $106.2 million in the first quarter.
In the elementary-high school market, residual orders account for most of the sales in adoption states in the first quarter, although several districts in California purchased new K-5 reading programs. As a result, sales in adoption states increased in the first quarter, but were offset by a drop in the open territory which had benefited in 2010 from large orders in Maryland, Illinois, and New Jersey. In testing, growth in the formative market was offset by a decline in custom and shelf products. Acuity, a leader in the formative assessment market, benefited from the addition of new customers.
The McGraw-Hill Higher Education, Professional and International Group’s revenue was down by 4.5% to $196.5 million in the first quarter. In this Group, sales of digital products and services were the bright spot, growing at a double-digit rate in a seasonally slow period. The continued success of McGraw-Hill Connect, the industry’s most advanced homework management system, and other interactive study, assessment and tutoring products helped to produce a modest gain in the U.S. college and university market.
The Broadcasting Group’s revenue grew by 10.2% to $20.6 million in the first quarter compared to the same period last year. Growth in automotive and service time sales and an increase in retransmission revenue offset the anticipated decline in political advertising in a non-election year.
McGraw-Hill Financial: Revenue for this new segment grew by 16.2% to $324.0 million and operating profit increased by 35.3% to $96.3 million in the first quarter compared to the same period last year. Excluding TheMarkets.com, which was acquired in September 2010, revenue grew by 11.9%.
Revenue grew at a double-digit rate in both domestic and international markets as solid performances in the newly organized business groups — Integrated Desktop Solutions, Benchmarks, and Enterprise Solutions — substantially offset softness in Research and Analytics. International revenues increased by 14.7% to $93.1 million and represented 28.8% of sales. Subscriptions, which accounted for $240.2 million, or 74.2% of the segment’s first quarter revenue, produced 16.3% year-over-year growth.
Founded in 1888, The McGraw-Hill Companies is a leading global financial information and education company that helps professionals and students succeed in the Knowledge Economy. Leading brands include Standard & Poor’s, McGraw-Hill Education, Platts energy information services and J.D. Power and Associates. The Corporation has approximately 21,000 employees with more than 280 offices in 40 countries. Sales in 2010 were $6.2 billion. Additional information is available at http://www.mcgraw-hill.com/.
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