It is looking more and more likely that Hungry Minds will be sold. In a filing with the Securities & Exchange Commission, the company said that as part of a new lending agreement with its bank, it will "take all steps necessary" to find a buyer by July 31. The bank agreement does not obligate Hungry Minds to find a buyer by the end of July, but the company must show that it is making a good faith effort to sell the company. And in comments accompanying the release of its second quarter results, Hungry Minds confirmed its intention to sell the business with the assistance of Morgan Stanley.
The results for the second quarter ended March 31, 2001, did not bring any signs of an immediate turnaround for the struggling company. Revenues fell faster than management expected, dropping 32%, to $43.8 million. The net loss for the period was $8 million, compared to net income of $4.6 million in the same quarter in fiscal 2000. Gross margins fell to 21.2% from 45.6% in last year's quarter. The company continued to show particular weakness in its technology group, with sales in that segment down about 60%, to $22.4 million. Sales in the consumer segment fell to $21.4 million. The company blamed the disappointing performance on a slowing economy, which has resulted in higher returns and soft reorders.
For the first half of the fiscal year, Hungry Minds had sales of $95 million and a $9.5-million loss, compared to revenues of $122.3 million and net income of $8 million in the first six months of fiscal 2000.
Speculation about a potential buyer for the company continues to center around its parent company, International Data Group. In an announcement that did nothing to discourage that thinking, Hungry Minds said that Timothy McNeill, an IDG vice-president in the early 1980s, has been appointed to the publisher's board of directors. Since 1989, McNeill has headed Wisdom Publications, a Somerville, Mass., independent publisher.
