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Posts Tagged ‘Numis Securities’

Waterstone’s Sales Boosted by HP7

HMV Group Plc, the U.K.’s largest music retailer and owner of the Waterstone’s book chain, reported higher revenue on sales of the new Harry Potter novel and as customers bought more DVDs because of wet summer weather, according to Bloomberg. Same-store sales rose 5.8 percent in the 18 weeks ended Sept. 1, excluding a Japanese unit that was sold, Maidenhead, England-based HMV said today. That compares with a 10 percent slide in the 10 weeks through July 1, 2006.

The results were “partly flattered” by Harry Potter, Numis Securities analyst Jose Marco Tobares said today in a note. “HMV is still a business in structural decline.” Total sales gained 12 percent. Revenue increased 2.7 percent at Waterstone’s stores open at least a year and would have been unchanged on the prior year if it weren’t for the novel about the teenage wizard, HMV said. Total Waterstone’s sales climbed 16 percent after the acquisition of Ottakar’s book stores. The chain is now made up of about 300 outlets.

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Pearson Sales Downgraded

Forbes reports that shares in Pearson Group, parent company of Penguin, plummeted to an early low of 734 pence ($14.60) in London Wednesday morning, after Deutsche Bank downgraded the stock to “Hold” from “Buy,” cutting its price target on the stock to 915 pence ($18.20) from 930 pence ($18.50). By market close, the shares had climbed back up to 753.50 pence ($15.03), a slight gain of 3.50 pence (7 cents), or 0.5%. The reasons for the downgrade hinged on a difficult outlook for both the “attractive” side of Pearson, namely its professional education business, and the “unattractive” publishing arm including Penguin and the Financial Times.

“I think it’s a little bit early to be worried about that,” said Sam Hart, analyst with Charles Stanley. He added that the outlook for the business was “pretty good,” and that Pearson’s $2.5 billion purchase of National Computer Systems in 2000 would help attract schools wishing use online tools as learning aids. According to Numis Securities analyst Richard Hitchcock this was an unfair evaluation. “Our view is we’re positive on Pearson,” he said. Regarding the Financial Times, he added: “You would never underestimate the impact of Murdoch, but it’s not a major profit driver.”

Reed Pondering Acquisition Options

After selling off Harcourt Education to Houghton Mifflin Riverdeep – in which it still has an 11.8% shareholder stake – Reed Elsevier said it would take another look at its balance sheet once the two Harcourt disposals complete, according to the Telegraph. One way is to sell off that minority share and borrow more money for further acquisitions. “We do recognise that when education completes we are in a new situation and we should look at this again,” said Reed CEO Sir Crispin Davis.

Houghton Mifflin Riverdeep is buying Reed’s US schools business for $4bn, while Pearson has agreed to buy the Harcourt assessment wing for $950m. Both deals should complete by the first half of 2008. Lorna Tilbian, an analyst at Numis Securities, said: “A strong case can be made that Reed is underleveraged and we believe there is scope for the group to increase its rolling share buyback”. The recent flurry leaves Reed focused on its science and medical education wings, which Davis is primarily happy about. “I have no ambition to go into any new sectors,” he said, adding he was particularly interested in acquisitions within online health and risk management, where “credit card fraud and employee screening are fast-growing areas”.

Reed Elsevier, Pearson Shares Fall

Marketwatch reports that Reed Elsevier was a top decliner Tuesday, down 2.8% while Pearson shares declined 0.4%. Shares in Reed Elsevier declined as analysts noted that the positions held by both companies in the U.S. educational publishing market mean the deal will be investigated by regulatory authorities, and may not close until the first half of next year.

“The market shares of Reed/Harcourt and Houghton Mifflin Riverdeep are approximately 20% and 15% and, accordingly, the transaction will be investigated,” said analysts at Numis Securities. Analysts at Bear Stearns noted: “Riverdeep has suddenly become the No. 1 U.S. schools publisher with a market share of approximately 33%, overtaking Pearson at 37% and McGraw Hill at 22%.”