McGraw-Hill Rides The Debt Wave – US-FOREX.US
The sale of Business Week won’t make much money for the McGraw-Hill Companies but it will take a money-loser off the books and signal to investors that there will be more judicious sales ahead – that’s the bullish take on McGraw’s stock. The company reports earnings Tuesday.Michael Meltz, an analysts at JPMargan Choose has an overweight rating on McGraw’s stock. He believes that Business Week which has seen advertising declines in 7 of the last 8 years has revenues of up to 150 million and is costing McGraw 20 million a year. Business Week competes with Forbes but also Fortune which is owned by Time Warner
and Barron’s which is owned by News Corp.
Meltz doesn’t believe that any of Business Week’s existing competitors will buy it.Though Business Week gets a lot of attention, it’s not anywhere near the largest players in the 6 billion financial service conglomerate that owns bond ratings agency Standard & Poor’s. Financial services account for 44% of sales and the three quarters of cash flow. McGraw-Hill
Educational, which includes the financial publishing arm is another 40% of sales.McGraw is fortunate that, with ample assistance from the US Treasury, debt issuance from companies, states and municipalities is running quite high – nearly 2 trillion for the first six months of the year . That should drive sales for its much-criticized but very influential bond rating service.Meltz expects revenues of 1.5 billion for the second quarter, down 12% from a year ago, and earnings of 48 cents a share, down from 71 cents in 2008.