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Wiley results 'disappointing', plans restructure
11.12.12 | Lisa Campbell
Wiley’s sales and operating income have been hit in its second quarter due to a weak higher education market and tighter library budgets, and the company plans restructuring, the publisher has announced.
In results posted yesterday (10th December), Wiley recorded a 3% dip in revenue for its second quarter ending 31st October to $431.8m (£268.5m), and its operating income stooped by 13% to $62.9m (£39.1m) as the company blamed global retail channels which “continue to be soft”.
Chief executive Steven Smith said that due to permanent changes in some consumer behaviour, it is preparing a restructuring programme that will better align its costs "with current and expected market conditions as they impact our traditional print business". The restructuring will result in “substantial” reductions in operating expenses from a combination of “lower cost of procurement related to outside vendor services, cost of sales improvements and direct expense savings globally", but more details won’t be released until March, the company said.
After selling travel assets, including Frommers, to Google for $22m (£33.7m), Wiley reiterated yesterday that it would continue to look to sell off print and digital assets “that no longer align” with its long-term strategy, including assets in pets, crafts, nautical and general interest categories.
It flagged up its purchase of online education service provider Deltak in October this year for $220m (£137m) a means of “helping Wiley to reposition its global education business” as the company generally positions itself to focus “almost exclusively on professionals in select fields".
Wiley’s Science, Technical, Medical and Scholarly (STMS) products had been impacted by tightening library budgets across the world but there was solid growth in articles accessed, funded open access revenue and digital book revenue, the company said. Digital book revenue now accounts for 20% of STMS book sales.
Steve Smith, president and chief executive of Wiley said: “Our results this quarter and through the first half of the year have been disappointing. The higher education textbook market has been much weaker than expected, a result of lower for-profit enrollments and shifting consumer behaviour.
"However, we are excited about the Deltak acquisition and its attractive growth prospects as a provider of online programmes for traditional universities.”
Smith added that America’s Hurricane Sandy had impacted on the business and forced its Hoboken office to close for a few days. He said: “Hurricane Sandy had a profound impact on some of our New Jersey and New York colleagues this quarter, and our thoughts are with them and all of those severely impacted by the storm . . . Because it happened at the end of our fiscal quarter, about $4m of revenue were delayed but it will be fully recovered in the third quarter.”