[ PW Home ] [ Bestsellers ] [ Subscribe ] [ Search ]

Publishers Weekly News

HM Gains in '97, Cautious About '98
Jim Milliot -- 2/2/98
Sales at Houghton Mifflin increased 11% in 1997, to $797.3 million, the company reported last week. Income from operations rose 38% to $42.6 million, although a number of special charges kept the growth in net income at 14%, to $49.8 million.
Nader Darehshori, HM chairman, said that he was "very pleased" with 1997 results, but in a conference call with analysts, he warned that sales in 1998 would increase only modestly over 1997, and that HM expects earnings from operations in 1998 to be below last year's level. Reduced adoption opportunities will slow sales growth this year and a number of investments in new products and infrastructure will hurt earnings, Darehshori said. News of the outlook for 1998 resulted in HM's stock falling 24%, to $28.69, on January 27.

In reviewing 1997, HM reported that sales in its school division rose 12.5%, to $560.2 million, with its secondary school division, McDougal Littell, having an extremely good year. Sales at Riverside grew by double digits last year, while sales in the college division increased 7.7%, to $149 million. The trade &reference division also recorded a 7.7% increase in the year, with sales hitting $88.1 million. (The trade division alone had a 6% sales gain and improved profitability.) HM said the division benefited from a strong response to its Mariner trade paperback line as well as higher sales of adult, children's and reference materials. Sales at Houghton Mifflin Interactive were up 40% in the year.

Looking ahead to 1998, Darehshori and Gail Deegan, executive v-p, CFO and treasurer, outlined HM's investment plans for the year, which will include increased investments in new products and operating and support systems. In addition, HM will be making investments to comply with year 2000 requirements.

Deegan noted that in 1997, HM spent approximately $130 million on product development, adding that the company expects editorial and plate spending to increase 12%-15% this year. "Some of the increase is related to changes in the timing of statewide adoptions, but a large share of the investment relates to product revisions and new products and services," Deegan said.

Other initiatives involve the use of the Internet, which HM expects to enhance its product content and delivery.

Deegan estimated that HM's investments in new systems and year 2000 costs will be more than $5 million higher in 1998 than in 1997. Deegan observed that the amount to be invested in the 2000 project will be less than HM invests in new systems. "The benefit from the new systems will be realized in 1999," Deegan said.
Back To News
--->
Search | Bestsellers | News | Features | Children's Books | Bookselling
Interview | Industry Update | International | Classifieds | Authors On the Highway
About PW | Subscribe
Copyright 2000. Publishers Weekly. All rights reserved.