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Pesce, New Wiley Chief, to Focus on Core Businesses
Jim Milliot -- 7/27/98
If being consistent is boring, then we will be boring," William Pesce told PW in an interview just a few months after succeeding Charles Ellis on May 1 as president and CEO of John Wiley &Sons. Pesce said that Wiley will continue to focus on its three core businesses -- educational, professional/trade and STM. All three had high single-digit sales growth in the fiscal year ended April 30, 1998, and all units also posted margin improvement in the year. "We have some momentum going into fiscal 1999," Pesce observed.Margin improvement is one of three strategic goals Pesce has set for Wiley in the current year. The company, which not too many years ago had extremely low margins, had an operating margin of 9.7% (13.3% if the $21-million gain from the sale of its law unit is included) in fiscal 1998, and Pesce plans to eventually get Wiley to an operating margin in the mid-teens. A healthy balance sheet is crucial if Wiley is to continue to be able to compete effectively in a publishing environment dominated by huge conglomerates.
Wiley's $99-million purchase of VCH in June 1996 was the largest acquisition in the company's history, and the publisher has the wherewithal to make another large purchase if the right opportunity comes along. "We couldn't say that a few years ago," said Bob Wilder, Wiley's chief financial and support operations officer. Since the VCH purchase, Wiley sold its law unit for $26.5 million and reinvested the proceeds to acquire Van Nostrand Reinhold in a $28.5-million deal. "We have a strong appetite for acquisitions... but we know we have to pick our fights carefully and then win them," Pesce said.
Wiley's acquisition policy is geared toward enhancing the company's position in any of its core businesses-and its ability to focus on niche areas is another key element in Wiley's competitive strategy. VNR fit perfectly with Wiley since Wiley already had an infrastructure in place to support the purchase, and VNR's products helped Wiley grow in markets where it had a presence, Pesce noted. Pesce further explained Wiley's niche strategy by observing that while Wiley may not be one of the largest publishers in the country, the company is among the leaders in its targeted markets. "We're big enough to compete where we choose to compete, yet small enough to keep in touch with the market and move quickly when we see an opportunity," Pesce said.
One direction that Wiley -- along with the rest of the industry -- is moving in is toward technology. But Pesce made it clear that while the company is investing heavily in electronic publishing, it's only introducing products that the marketplace is ready to accept. "Our goal is to get content to our customers the best way possible," he said, noting that every textbook in Wiley's college list has more than just a print component. In addition, the company has made a significant commitment to disseminate its STM materials online through the Wiley Interscience service. Pesce expects the growth in technology to be an evolutionary process, and said that for at least the next three to four years the majority of Wiley's revenues will come from print products.
One area in which Wiley did not make its budget was in Asia, where economic problems hurt sales. Pesce thinks that while some Asian economies may be improving, the key toward a complete recovery will be what happens in Japan. And while Pesce is uncertain how well Japan will perform this year, he is bullish on the region for the long term: "We see this as a bump in the road," Pesce said.
Looking at the prospects for fiscal 1999, Pesce expects Wiley to gain marketshare in each of its core businesses, which will result in sales growing in the 7%-9% range, and with profits increasing faster than revenues.
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