John Wiley & Sons (JW.A) is transitioning to digitization due to soft demand for print media. Moreover, the company is focusing on building a more favorable product mix as digital services/ products generate higher margins. The company’s recent acquisitions have a vital role to play in this.
Inorganic expansion is being pursued aggressively at John Wiley and is yielding positive results as evident from the company’s first quarter fiscal 2015 results.
The company’s adjusted earnings per share of 56 cents and revenues of $437.9 million topped the Zacks Consensus Estimate, while rising 10% and 7% year over year, respectively. Several acquisitions including CrossKnowledge and Talent Solutions in the Professional Development segment, along with growth at the Education segment drove better-than-expected results.
To gain market share, the company, which competes with Reed Elsevier NV (ENL), Scholastic Corporation (SCHL) and The E. W. Scripps Company (SSP), has been on an acquisition spree over the past few years and has taken over several publishing and distribution companies along with various online service providers.
Most notable acquisition in the recent past was that of Inscape Holdings, Inc. — an eminent provider of online training and assessment solutions — for $85 million in Feb 2012. Further, in Oct 2012, the company had bought Chicago-based Deltak.edu, LLC, a private provider of higher education and online learning services, for $220 million. In Nov 2012, the company purchased Efficient Learning Systems Inc, an online learning system, for $24 million.
Close to the end of fiscal 2014, the company concluded the acquisition of Profiles International, an employment assessment and talent management solutions provider, for $51 million. CrossKnowledge, a provider of learning solutions, was purchased for $175 million in May 2014.
Moreover, as part of the company’s ongoing shift, it has taken up cost cutting vigorously and expects to achieve $80 million in savings, beginning 2015.
However, tough advertising environment as well as volatility in prices of raw materials has multiplied John Wiley’s problems. As a result, the stock currently carries a Zacks Rank # 4 (Sell).
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