The soft holiday season apparently did not bother HarperCollins, which reported a 12.8% sales increase, to $326 million, and a 14.3% gain in operating profit, to $48 million, for the quarter ended December 31. Company president Jane Friedman said the gains came across all divisions in all four of HC's major markets.

In the U.S., sales in the general books group rose 44% and operating profits jumped 99%, while sales in the children's group increased 15% and profits were up 59%. Friedman attributed the gains in the adult group to strong frontlist sales and steady backlist sales, with the latter led by Bel Canto (700,000 copies in print) and Fast Food Nation. Prey did well in the quarter, and "is on track to sell what we thought it would," Friedman said. Equally important to HC's success in the quarter were its self-help titles, including Dr. Atkins' New Diet Revolution and Body for Life. The children's line has been led by the success of the Lemony Snicket series. Zondervan's contribution to the quarter was The Purpose-Driven Life, which now has 1.4 million copies in print. "It's our own Jabez," Friedman said. In all, HC placed 40 titles on the New York Times bestseller lists in the quarter.

Overseas, Friedman was most excited about the turnaround in Australia, where sales were up 11% in the quarter and profits rose 52%. The Lord of the Rings trilogy did well in Australia (as it did in the U.K. and Canada) and the company had hits with Prey, a book by local author Donna Hay and the Mary Kate and Ashley series.

Friedman sees no letup in HC's performance in the second half of its fiscal year. January was a record month and February has started out strong. "We will finish the year very profitably," Friedman said. For the first half of fiscal 2003, operating income rose 27.7%, to $106 million, on an 11.8% increase in revenue, to $673 million.

With so much cash, HC is in an "acquisitions mode," Friedman said, adding that HC might be interested in the AOL Time Warner Book Group. "At the right price, it would be a wonderful acquisition." One obstacle to a possible deal, however, is the interest of HC's parent company, News Corp., in acquiring the satellite television company DirecTV, a deal that would be very expensive.