The Wall Street Journalreports (subscription required) of upcoming releases this summer such as Andrew Davidson's The Gargoyle, New York Times reporter David Carr's memoir The Night of the Gun, and Ron Suskind's The Way of the World: A Story of Truth and Hope in an Age of Extremism.
There's a separate article on the release of Stephenie Meyer's book Breaking Dawn, which The Journal calls a "vampire romance novel." Borders Group (NYSE: BGP) said it has sold 250,000 copies in the first 24 hours following the book's release.
That's an impressive number, and it may be some cause for hope for shareholders who have taken a beating in booksellers like Borders, Barnes and Noble (NYSE: BKS) and Books-a-Million (NASDAQ: BAMM).
But don't get too excited. Since the first American edition of the first Harry Potter book in October of 1998, shares of Scholastic (NASDAQ: SCHL), a specialty publisher of children's books, have gone from around $20 per share to their current price of $26 -- a gain of 30% over the course of a decade. Not exactly something to get excited about, especially considering it's one of the bestselling books of all time, ever.
The bookstores might get a temporary jolt from late sumer and fall hits, but the long-term fundamentals of the industry will drive results. A new CD from Eminem -- or even The Beatles for that matter -- wouldn't be enough to save a company like Trans World Entertainment (NASDAQ: TWMC). For bookstores, that means the lower prices and wider selection of Amazon.com (NASDAQ: AMZN), or conveniences of stores like Wal-Mart (NYSE: WMT), as well as the onset of digital delivery are the factors investors have to look at.
And even vampire romance novels can't compete with those.
The Wall Street Journal's Walter Mossberg said in the "Personal Technology" column that he cannot recommend Apple Inc's (NASDAQ: AAPL) MobileMe, as it has "too many flaws to keep its promises".
The Wall Street Journal also speculated that the collapse this week of SemGroup LP, which is the parent of SemGroup Energy Partners LP (NASDAQ: SGLP), may have played a role in the 14% drop in crude oil over the past 10 days.
In a move that could take advantage of the gap in the financing markets, The Goldman Sachs Group Inc (NYSE: GS) raised $10B to invest in loans backing leveraged buyouts. The fund will reportedly buy senior loans, the Financial Times reported.
OTHER PAPERS:
Former American International Group Inc (NYSE: AIG) chief Hank Greenberg is reportedly in settlement talks with New York Attorney General Andrew Cuomo over charges that Greenberg improperly inflated corporate books to show improved profits, the New York Post said.
If you have children in elementary school, then you know Scholastic Corporation (NASDAQ: SCHL), operator of the annnual school book fair. Scholastic does an excellent job publishing high-quality children's literature and other educational materials. If only it could do so at a profit. Scholastic has been the U.S. publisher for the Harry Potter series these past few years. But even during the height of Pottermania, Scholastic did not turn much of a profit. This year is no exception. The company recently released 3Q 2008 results. Revenue increased $12 million to $458 million, yet losses continue to widen to $4.6 million for the quarter in which there was no Harry Potter release.
YTD 2008 figures show revenue increased 20% and net income more than doubled due to the last Harry Potter release in the previous quarter. Yet YTD net loss now totals $9.3 million or $0.24 per share compared to net income of $20.5 million in the previous year. To be fair, Scholastic has taken huge losses -- $82 million in Q3 2008 alone -- to exit its direct-to-home sales channel. This led to a $77.5 million net loss in Q3. But even with all business segments "performing solidly," according to CEO Richard Robinson, the company continues to bleed money.
Bloomsbury Publishing PLC, the British publisher of Harry Potter, recently reported robust sales and profit from Harry Potter books. Given that Scholastic also published this year's Caldecott Medal winner, Brain Selznick's The Invention of Hugo Cabret, why is the company still drownding in red ink? S&P Equity downgraded the comapny from Buy to Hold.
If you have a child younger than high-school age, then you know about Scholastic Corporation (NASDAQ: SCHL), the world's largest publisher of children's literature and educational material, and the sponsor of the annual school book fair.
Not incidentally, Scholastic also is Harry Potter's publisher, which one would think would be a fairly lucrative revenue stream. Apparently not. Ellie Berger has been named President of Trade for Scholastic in part to figure out how to turn over a new (and hopefully profitable) leaf for Scholastic. Despite record-setting revenue in 1Q FY 2008, which included the release of Harry Potter and the Deathly Hallows, Scholastic still managed to post a loss. On revenues of $587 million, a 75% increase, Scholastic posted a net loss of $2.8 million for the quarter. But this loss is a huge improvement over the $47 million net loss a year earlier.
This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.
"I will take the Ring," he said, "though I do not know the way." -- Frodo Baggins, The Fellowship of the Ring
"There is no good and evil, there is only power, and those too weak to seek it." -- Voldemort, Harry Potter and the Philosopher's Stone
In the late 1920s, J.R.R. Tolkien started writing a fantastical story about magical creatures known as hobbits, elves, and dwarves, in a made up world he called Middle Earth, for the benefit of his children. The work he completed, The Hobbit, became the prelude to one of the great literary masterpieces of all time -- The Lord of the Rings trilogy. Some 70 years later, J.K. Rowling started writing a fantastical story about a different set of magical creatures known as witches and wizards, in a not so made up world called England, for the benefit of her daughter. That book, Harry Potter and the Philosopher's Stone (Harry Potter and the Sorcerer's Stone here in the States), and the six books that followed in the series, have made Rowling the wealthiest woman in the world.
The authors share many similarities. Both are British, use initials in place of their first names, are famous for one major literary contribution (although Rowling, having the benefit of still being alive, will have many years to change that), and have had cinematic empires based on their works.
In today's WSJ, there is an article discussing the potential lightening up on the pace of share buybacks from public U.S. corporations. The reason is simple: the tightening of capital and lending is causing a liquidity crunch and putting balance sheets more at risk. The WSJ stated that Standard & Poor's estimated that $122 billion was spent by U.S. companies to repurchase stock in Q2 2007 alone. Right now Wall Street is in love with share buybacks. After all, a share buyback in the open market can create a substantial floor in a stock. If it doesn't create a floor it can at least offset some major selling.
Companies that buy their own shares do not necessarily retire the shares permanently. These shares become treasury stock that can be used to fund future buyouts that maybe the company thinks aren't feasible today. The shares can also be used as a form of currency to fund other ventures down the road. But the shares bought back are not in the common stock that receives dividends from the company.
For those of you who want to take part in the Harry Potter (Scholastic Press, NYSE: SCHL) water cooler chatter but don't have the time to plow through Harry Potter and the Deathly Hallows, we have prepared this summary:
The last novel of the series covers the culmination of Harry's war with the evil Lord Voldemort. The story begins with the servants of Voldemort overwhelming the forces of good magic, taking over the Ministry of Magic and Hogwarts, where longtime evil ally Snape is placed in charge.
Harry and his friends Ron and Hermione are forced to go on the run to hide from Voldemort, whose single greatest ambition is to kill Harry, the only person who can destroy him.
It might seem hard to imagine, but the success of the Harry Potter franchise over the past decade has done little to bolster the fortunes of its publisher, Scholastic (NASDAQ: SCHL). With a market cap of $1.4 billion, the company may not be worth much more than the book's author J.K. Rowling.
But with Harry Potter on the way out as a huge source of income (although residual sales will, of course, continue to be strong), Bloomberg believes that the company "may face an exodus of shareholders if the company doesn't consider selling itself."
The stock looks cheap at .66 times sales the Bloomberg piece quotes analyst Drew Crum saying that shares could be worth a 48% premium to their current price if the company is sold.
But that means nothing if management doesn't want to sell, and CEO Richard Robinson controls the company through his ownership of Class A shares.
The most appalling quote from the Bloomberg piece is here:
Robinson, whose father Maurice founded the company in 1920, ``is not a seller,'' Chief Financial Officer Maureen O'Connell said in an interview. Through its ownership of Class A shares, the Robinson family controls four-fifths of Scholastic's board.
``I don't think Dick's going anywhere,'' O'Connell said. ``He's having too much fun right now.''
If Mr. Robinson wants to run the company for fun rather than the benefit of minority shareholders, he should take the company private himself.
Keep a close on this stock. If Scholastic continues to stumble, Robinson could face pressure to do the right thing and enhance shareholder value.
Spoiler alert – if you have not yet read the conclusion to the Harry Potter saga, Harry Potter and the Deathly Hallows, you may want to skip this post, in which the ending is discussed.
For companies such as publisher Scholastic Corp. (NASDAQ:SCHL), the US publisher of the books, Time Warner (NYSE:TWX), whose Warner Brothers Studios produces the hugely profitable Harry Potter movies, and General Electric's (NYSE:GE) Universal Studios, which will open a Harry Potter theme park in 2009, the seventh and final Harry Potter book must have come as a great relief.
Despite rumors to the contrary, the title character did not die, and thereby cast a pall on the series and its offshoots. Rather, as I expected, Harry prevailed, and in general the core cast lived happily ever after. Even Snape, as I predicted, achieved redemption, but at a mortal cost.
In the coda to the novel, Harry Potter and his wife, the former Ginny Weasley, watch their children depart for Hogwarts. Also placing their children on the Hogworts train are Harry's best friends, the married couple Ron Weasley and Hermoine Granger.
This final scene, nineteen years after the climax of the book, will no doubt inspire a great deal of conversation, as it keeps open a couple of possibilities for future novels in the Potter universe. Harry is still young enough to have more adventures, perhaps as he takes on the role of the era's greatest wizard, much as Albus Dumbledore was in Potter's youth. Rowling could also, should she decide to continue the series, reboot the series with the next generation of Hogwarts students.
I don't expect her to return to the Potter storyline for a long time, if ever, but the lure will always be there; a huge, thirsty audience ready to demonstrate their devotion with their pocketbooks.
BloggingStocks's Tom Barlow is pretty sure that Harry Potter isn't about to meet his untimely demise, but a lof of gamblers aren't so sure: According to Bloomberg, "William Hill Plc, a London-based bookmaker, closed bets on Harry sacrificing himself at 2/5 odds on July 17, cut from an original quote of 33/1 in early July. Lord Voldemort, who murdered Potter's parents, is at 9/4 to kill Harry, and Professor Severus Snape is at 4/1 odds to murder him. The bookmaker took more than 50,000 pounds ($100,000) in bets on Harry's fate, the first time in the company's history it had ever bet on a book."
This seems kind of inane: People are gambling about what will happen in a fictional story that they haven't read yet, and only the author and a few insiders know what's going to happen in the latest Harry Potter, set to be released tomorrow.
The strong odds that gamblers are assigning to the death of Harry combined with a general belief in the wisdom of crowds lead me to a conclusion: By this time tomorrow, millions of bookworms will be mourning Harry's passing.
Boarding a train into Manhattan on Monday night, I found myself in a seat (rare in itself) across from an Oxford-wearing twenty-something engrossed in Harry Potter and the Order of the Phoenix, the fifth tale in the series, released just last week in theaters. Aside from checking the stops occasionally, he never looked up from his book.
Shortly later I transferred trains; a woman, maybe 50, sat down across from me. She too pulled out a book -- Harry Potter and the Prisoner of Azkaban, Potter's third book.
Potter's ubiquity reminds this Muggle of critic Chuck Klosterman's notes on the death of Johnny Carson and the popular notion that there could never be another Carson, who in his day had such a wide and total grasp on the nation. Klosterman argued that of course there could be another Carson, except that through the fragmenting and stratification of popular culture -- augured by the niche channels of cable television, taken to extremes by the internet -- we have instead chosen to retreat into cultural cliques, limiting common experience to -- what? Devastating acts of terror, I guess.
As I recall, Outkast's massive 2003 hit song "Hey Ya!" was the closest thing Klosterman could propose as a unifying cultural force (not without his reservations), but he might have overlooked J.K. Rowling's little wizard. Who since maybe The Beatles has met this sort of worldwide fanfare with each new offering? Publisher Scholastic (NASDAQ: SCHL) is delivering a record-breaking first-print run of 12 million U.S. copies to meet demand -- that's a copy of Harry Potter and the Deathly Hallows for every ninth household.
Harry Potter and the Deathly Hallows by JK Rowling is scheduled to be published by Scholastic Press (NASDAQ: SCHL) on July 21, and some fans are speculating that Harry will die. I am quite confident in telling you that he won't, for several reasons.
1. The artistic. Experienced authors will tell you that a satisfying ending is one that, after it happens, readers will see as inevitable, even if they didn't see it coming. For example, the ending of Sixth Sense, while a shocker to many (including me), worked because it neatly tied up loose threads we'd momentarily lost sight of. The ending completed the Bruce Willis' character arc.
Rowling has not established the need for someone to sacrifice his life so that Voldemort might die. In fact, she has already given Harry's parents and Dumbledore to the cause. Harry's death would be gratuitous, and, most importantly, inconsistent with the rest of the saga. Harry is the viewpoint character, and it is our vicarious enjoyment of his overcoming obstacles that gives the series such impact. It's hard to enjoy the denouement of a dead character.
Most importantly, though, Harry is not a flawed character seeking redemption through sacrifice. He is an innocent predestined to conquer the wicked AND LIVE HAPPILY EVER AFTER.
2. The practical. If Rowling were to kill off her hero in the final book, it would not only diminish sales of this volume, but horribly impact the future sales of the series. Knowing that Harry was to die, (and who on Earth would not know of this plot twist?), would change the reader's experience, robbing each bit of conflict of its gravitas. Plus, fans would revolt. Arthur Conan Doyle learned this lesson when he tried to kill off Sherlock Holmes -- some plot reversals fans will simply not accept.
3. The financial. With two more films on the planning board (including Harry Potter and the Order of the Phoenix, due for release July 11th by Warner Brothers, a division of Time Warner, NYSE:TWX) and a theme park in development, I can't believe these companies would invest so much in a closed-end storyline. And while Rowling may have all the money she needs, keeping the tale open-ended is a much shrewder business decision.
So I'm not worried about Harry. My prediction -- he'll defeat Voldemort with Snape's help, assume Dumbledore's position as head of Hogworts, marry Jenny Ginny and stand as best man at Ron and Hermione's wedding.
While the upcoming release of the seventh and final volume in the Harry Potter series will certainly give a boost to Scholastic's (NASDAQ: SCHL) bottom-line, don't expect booksellers to get the benefit. Deep discounts at retail will make it difficult for many bookstores to make a dime on "Harry Potter and the Deathly Hallows".
Amazon (NASDAQ: AMZN) has the title available at 49% off its $34.99 cover price and Barnes and Noble (NYSE: BKS) has it at 40% off. Competing against deals like those, many mom and pop shops are frustrated. There's little they can do with Harry Potter except sell it for around what they pay for it and use it as a loss-leader, hoping that people who buy it will buy other books too. Some even grumble that it will be cheaper for them to go buy it at a discounter like Wal-Mart (NYSE: WMT) than to order it from the publisher.
Of course, the problem is not limited to Harry Potter. With sites like Amazon discounting nearly every title in stock, bookstores, including Borders (NYSE: BGP) are struggling. They may need to take a look at bars for inspiration.
Think about it. On Friday nights, most bars are packed, even though people could have a bottle of wine at home for the same price they will pay for a glass or two in the bar. The reason? The bar is providing something intangible (OK, maybe it is just a place to meet people of the opposite sex, and I'm not suggesting Borders should turn itself into a hook-up spot) that makes people willing to pay more.
The numerous events that stores are holding -- parties and the like -- will help draw people in to overpay for their copy of Harry Potter. But Harry Potter aside, these stores have to find some way to add value in a way that the internet can't if they are going to survive. They can't compete with Amazon on price, but maybe they can offer something more important.
If Reuters is accurate, the seventh and final Harry Potter novel, Harry Potter and the Deathly Hallows, won't just be a consumer hit, but will also hit book-sellers in the pocketbook. Would you have ever believed it if you read that perhaps the biggest book event of 2007 is going to be a money loser for those selling it? I wouldn't have believed it; it sounds ludicrous. Using a key seller as a loss leader sounds a bit like selling plasma and LCD TVs at a loss at convenience stores to make money off smokes and bubble gum.
This makes me wonder why book stores don't just sell the book at a profit and take the risk that the other secondary and tertiary shopping dollars spent on the same visit don't go too far away. Why would a supermarket be able to sell the novel for cheaper than a distributor? That's the claim, and it is pretty shocking that Scholastic Corp. (NASDAQ: SCHL) would create a pricing tier in which book stores lose money. It's almost shocking the company also didn't put pricing demands or restrictions on sales of the hit book for the first 60 days. The demand for Harry Potter is nearly inelastic, at least around the launch date, or not as sensitive to price as the discounters would think.
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"I will take the Ring," he said, "though I do not know the way."
For those of you who want to take part in the Harry Potter (
Spoiler alert – if you have not yet read the conclusion to the Harry Potter saga, Harry Potter and the Deathly Hallows, you may want to skip this post, in which the ending is discussed.
Boarding a train into Manhattan on Monday night, I found myself in a seat (rare in itself) across from an Oxford-wearing twenty-something engrossed in Harry Potter and the Order of the Phoenix, the fifth tale in the series, released just last week in theaters. Aside from checking the stops occasionally, he never looked up from his book.
Harry Potter and the Deathly Hallows by JK Rowling is scheduled to be published by 
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