Newly Minted Hungry Minds Has Earnings Dip

Jim Milliot |

Nov 20, 2000

News
Newly Minted Hungry Minds Has Earnings Dip Jim Milliot -- 11/20/00 IDG Books has changed its name to Hungry Minds Inc., in a move the company said reflects the transformation of its business beyond books to a variety of e-services such as subscriber-based e-newsletters, corporate answer networks and destination Web sites. HM chairman John Kilcullen noted that while books will remain "a core distribution platform for our content, we are committed both to deepening and to applying new ways of engaging our customers." IDG acquired the online learning company Hungry Minds this summer (News, Aug. 28). The name change came as the company reported that net income for the fiscal year ended September 30, 2000, fell 3.2%, to $12.1 million, while revenues increased 35.3%, to $243.3 million. HM said the increase in revenues was due almost entirely to its acquisition of the Macmillan Consumer Reference group, which boosted sales in HM's consumer division by 118% in the year. Excluding the Macmillan purchase, sales in the consumer side fell 4.5% in the year. The company also reported disappointing sales in its technical division, where sales fell 13%, to $108.2 million. A $16-million decline in sales of its Office book series plus softness in HM's Canadian and U.K. businesses offset gains in the division's Bible, Visual and AOL lines. Online revenue in the year increased to $2.8 million, due primarily to strong demand at Arthur Frommer's Budget Travel Online (www.frommers.com). Executives said they expect fiscal 2001 to be a "challenging transition year." Revenues from HM's core businesses are projected to be flat in the year, although gross margins are expected to improve. Internet sales are forecast to rise to $9.4 million, with losses from its online businesses expected to be about $12 million, mostly due to staffing costs. Among the ways Hungry Minds hopes to improve margins is to be more selective in publishing new titles and to prune slow-moving backlist books. Plans call for HM to release 753 new titles in fiscal 2001, compared to 755 books in fiscal '00. First printings are also likely to be trimmed as HM acknowledged that it had too much capital tied up in inventory. In addition, HM is considering signing more work-for-hire contracts with authors rather than more conventional advance-against-royalty contracts. In a final note, HM said that due to conversion difficulties, HM's alliance with iUniverse that will allow customers to created customized titles (Computer Books, July 3) will not be ready to launch until January or February.

News

Newly Minted Hungry Minds Has Earnings Dip
Jim Milliot -- 11/20/00

IDG Books has changed its name to Hungry Minds Inc., in a move the company said reflects the transformation of its business beyond books to a variety of e-services such as subscriber-based e-newsletters, corporate answer networks and destination Web sites. HM chairman John Kilcullen noted that while books will remain "a core distribution platform for our content, we are committed both to deepening and to applying new ways of engaging our customers." IDG acquired the online learning company Hungry Minds this summer (News, Aug. 28).

The name change came as the company reported that net income for the fiscal year ended September 30, 2000, fell 3.2%, to $12.1 million, while revenues increased 35.3%, to $243.3 million. HM said the increase in revenues was due almost entirely to its acquisition of the Macmillan Consumer Reference group, which boosted sales in HM's consumer division by 118% in the year. Excluding the Macmillan purchase, sales in the consumer side fell 4.5% in the year. The company also reported disappointing sales in its technical division, where sales fell 13%, to $108.2 million. A $16-million decline in sales of its Office book series plus softness in HM's Canadian and U.K. businesses offset gains in the division's Bible, Visual and AOL lines. Online revenue in the year increased to $2.8 million, due primarily to strong demand at Arthur Frommer's Budget Travel Online (www.frommers.com).

Executives said they expect fiscal 2001 to be a "challenging transition year." Revenues from HM's core businesses are projected to be flat in the year, although gross margins are expected to improve. Internet sales are forecast to rise to $9.4 million, with losses from its online businesses expected to be about $12 million, mostly due to staffing costs.

Among the ways Hungry Minds hopes to improve margins is to be more selective in publishing new titles and to prune slow-moving backlist books. Plans call for HM to release 753 new titles in fiscal 2001, compared to 755 books in fiscal '00. First printings are also likely to be trimmed as HM acknowledged that it had too much capital tied up in inventory. In addition, HM is considering signing more work-for-hire contracts with authors rather than more conventional advance-against-royalty contracts.

In a final note, HM said that due to conversion difficulties, HM's alliance with iUniverse that will allow customers to created customized titles (Computer Books, July 3) will not be ready to launch until January or February.

A version of this article appeared in the 11/20/2000 issue of Publishers Weekly under the headline: