The McGraw-Hill Companies (NYSE: MHP), a distributor of business information and educational materials which counts Scholastic (NASDAQ: SCHL) as a related stock, issued third-quarter results earlier today. Sales contracted over 8%. Net income on a dollar basis dropped almost 14%. Earnings per diluted share decreased a very unlucky 13% to $1.07. At least expectations were taken out. Earnings.com indicates a beat of two pennies for per-share profit.

The declines are pretty understandable. When you think about McGraw-Hill, you understand fairly quickly that the company's business model is tied closely to the economy. Education markets must be tough given all the budget cuts happening in school systems across the country. Plus, spending by administrators is probably done these days very slowly and carefully.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Activision Blizzard Inc. (NASDAQ: ATVI) shares rose after it reaffirmed its full-year earnings and sales outlook.
• Automatic Data Processing Inc. (NASDAQ: ADP) will have low double-digit EPS growth, predicts one analyst.
• AutoZone Inc. (NYSE: AZO) posted a decline in earnings but a small rise in sales, sending shares lower.
• Bed Bath & Beyond Inc. (NASDAQ: BBBY) posted better-than-expected Q2 earnings and higher revenue.
• CarMax Inc. (NYSE: KMX) rallied to a new 52-week high after topping analysts' Q2 earnings expectations.
• Carnival Corp. (NYSE: CCL) reported better-than-expected Q3 results and raised its full-year guidance.

Scholastic (NASDAQ: SCHL), the publisher of the Harry Potter books, issued its first-quarter numbers on Thursday. Although things do seem to be improving, I can't say I was wholly enchanted by the data.

Net sales from continuing operations rose 14%. Okay, that's a good start. Double-digit rises are always respectable. But then we get to the bottom line. Scholastic, which is a related business to McGraw-Hill (NYSE: MHP), lost 68 cents per share from continuing operations. Now, sure, the loss was considerably less severe than the year-ago black ink of $1.13 per share. But I always get nervous when I read about losses. Can't help it.

Much of the focus this week will no doubt be on the FOMC meeting on interest rates and the subsequent decision, as well as on the G-20 meeting in Pittsburgh, were the agenda will include bonuses for bank executives among other things.

Things will be fairly quiet again on the earnings front as the next earnings season has yet to ramp up. However, analysts surveyed by Thomson Reuters do have high hopes for a handful of companies that will release results this week.

Given the recent controversy over Obama's address to school children Tuesday, I was interested to see the speech released on the White House web site. While not all schools will be showing the speech, it is still likely to have a huge audience of many students across the nation. I looked to see which companies might benefit from this exposure.

Overall, Obama encourages kids to study hard, be responsible and overcome the many obstacles they face, while relating his own difficulties from school.

Google (NASDAQ: GOOG) gets a positive mention as an example of the kind of company to strive to build.

The iPhone also makes it into the speech, to the benefit of Apple (NASDAQ: AAPL).

J. K. Rowling -- author of the Harry Potter series -- gets included, a plus for her publisher, Scholastic Corp. (NASDAQ: SCHL), and Time Warner (NYSE: TWX), which has released the movies based on the books.

John Reese is an expert in analyzing the investment criteria of "legendary" advisors with time-tested strategies. And one market approach that may be of particular interest to investors during the current period of market turmoil is the value strategy developed by Benjamin Graham. (For more on this strategy, see our other post, "Three Rules of Value Investing".)

In his Validea newsletter, John reese explains, "Benjamin Graham -- considered the greatest investment guru by Warren Buffett -- built his reputation by using an extremely conservative, low-risk approach to investing." Buffett, incidentally, was Ben Graham's student.

Reese continues, "To Graham, preserving one's original capital was every bit as important as netting big gains. Having lived through the 1929 market crash, it's no surprise that the strategy Graham laid out in his classic book The Intelligent Investor was a conservative, loss-averse approach.

"To Graham, an investment wasn't something that could be turned into quick, easy profits; anything that offers such 'easy' rewards also comes with substantial risk, and Graham abhorred risk. In terms of specifics, Graham's approach limited risk in a number of ways, and my Graham-based model lays out several of those methods.

Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders KB Home (NYSE: KBH) and Lennar Corp. (NYSE: LEN) as investors look for any sign that the housing sector has bottomed (home sales numbers are also due out this week; see below). Analysts surveyed by Thomson Financial anticipate that both companies will report that they narrowed their losses in the most recent quarter.

KB Home's expected $1.25 per share loss, on revenue of $725.5 million, compares to the previous quarter loss of $3.30 and to a year-ago loss of $6.19. However, KB Home's losses in the past few quarters have been deeper than expected. The Los Angeles-based homebuilder's long-range earnings growth forecast is 10.5%, less than the S&P 500. Analysts continue to recommend holding KB Home, and have for at least 120 days. Shares, however, reached a new 52-week high of $31.69 on Friday, and they are up 10.5% year to date.

Lennar is expected to post a loss of 52 cents per share, on revenue of $1.1 billion. That compares to the previous quarter's per-share loss of 76 cents and to a year-ago loss of $3.25. While Lennar also has tended in the past few quarters to miss expectations, the Miami-based company managed a positive surprise in the first quarter of 2008. Lennar's long-range earnings growth forecast is 10.3%, about the same as KB Home's. Analysts also recommend holding Lennar. Friday, shares of Lennar also reached a 52-week high, $27.75, but they are down 6.4% year to date.

MAJOR PAPERS:

• The Wall Street Journal's "Smartmoney Stock Screen" looks at eight companies whose valuations make them ripe to buy, and they also may be in the sites of corporate buyers. The big eight include Asbury Automotive Group Inc (NYSE: ABG), Crane Company (NYSE: CR), Scholastic Corporation (NASDAQ: SCHL) and The Scotts Miracle-Gro Company (NYSE: SMG).
• 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.

As one quarter rolls over into the next, here are some highlights from this past week's earnings coverage from BloggingStocks:

• Best Buy Inc. (NYSE: BBY) beat fourth-quarter expectations and offered a positive outlook for fiscal 2009.
• CarMax Inc. (NYSE: KMX) beat Wall Street earnings estimates for the fourth quarter.
• Citi Trends Inc. (NASDAQ: CTRN) beat fourth-quarter estimates and offered a rosy outlook for fiscal 2009.
• Constellation Brands Inc. (NYSE: STZ) swung to a fourth-quarter loss but beat estimates.
• Family Dollar Stores (NYSE: FDO) beat second-quarter estimates but slashed its full-year outlook.
• Immucor Inc. (NASDAQ: BLUD) beat third-quarter expectations and offered a positive full-year outlook.
• Monsanto Co. (NYSE: MON) beat second-quarter expectations but the full-year outlook disappointed.
• Mosaic Co. (NYSE: MOS) third-quarter earnings surged on strong demand and higher crop prices.
• Paychex Inc. (NASDAQ: PAYX) results on path to continue an 18-year earnings/revenue growth streak.
• Red Hat Inc. (NYSE: RHT) posted solid fourth-quarter results on strength of JBoss and other offerings.
• Research in Motion Ltd. (NASDAQ: RIMM) fourth-quarter earnings and revenue more than doubled.
• Ruby Tuesday Inc. (NYSE: RT) third-quarter earnings beat low expectations; full-year outlook is bleak.
• Scholastic Corp. (NASDAQ: SCHL) announced disappointing third-quarter results post-Harry Potter.
• UBS (NYSE: UBS) writes off $19 million for the first quarter and shows chairman the door.

Also, prospects look grim for some newspapers. The financial crisis in the U.S. prompted the IMF to cut its global growth forecast.

Upcoming results to watch for include Alcoa (NYSE: AA), Circuit City Stores (NYSE: CC), Bed Bath & Beyond (NASDAQ: BBBY), and General Electric (NYSE: GE).

Visit AOL Money & Finance for more earnings coverage.

As a former English teacher, I can't count the times that I had to listen to a student complain about the "relevance" of this book or that book. I usually tried to explain how literature affects culture and books change the world. I only wish that I'd thought to check out Scholastic Corporation's finances.

On Thursday, citing a tough economy, Scholastic Corporation stated that its expectations for the forthcoming year were somewhat dark. This, combined with a considerable quarterly loss, led to a 13.5% drop in its stock value, leaving it at $30.69 per share. Today, it dropped slightly more, and is currently at $30.25.

I have fond memories of reading Scholastic's books when I was a kid, and I certainly don't like to see the company in pain. However, as an author, I have to admit a certain amount of wondrous amazement at the situation currently unfolding. You see, Scholastic's dire predictions for 2008 center around the fact that it will not have a "Harry Potter" book to give its sales a shot of adrenalin.

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.

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.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

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.

But maybe others really do know? There have been reports of pirated copies showing up on the internet and The New York Times and Baltimore Sun have already gotten copies, reportedly through bookstores.

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.

More Harry Potter news

Tom Barlow: The Harry Potter Finance Quiz
Gary E. Sattler: New York Times bestseller list leaves Harry Potter out
Tom Barlow: Harry Potter ending: A water cooler cheat sheet
Zac Bissonnette: With Harry Potter done, is it time for Scholastic to sell itself?
Tom Barlow: Rowling safeguards Potter empire
Zac Bissonnette: Is the last book the end of Potter mania?
Tom Barlow: Harry Potter and the Pots of Gold
Barry Summerlin: Harry Potter doesn't even need Muggle marketing
Julie Tilsner: Not even Harry can save bookstores from their fate
Peter Cohan: Harry Potter and the Pot of Gold
Tom Barlow: Harry Potter and the Deathly Hallows: Will Rowling kill off Harry?

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.

Leading textbook publisher Houghton Mifflin has agreed to pay $4 billion for the Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions of Reed Elsevier. The deal creates a textbook powerhouse, as it combines two of the leaders in market-share into one entity. With textbook prices already spiraling out of control, this may not bode well for students. Less competition has a way of leading to higher prices.

But if Houghton Mifflin is in a buying mood, I have an idea for them: Scholastic Corporation (NASDAQ: SCHL), the world leader in children's books with its Harry Potter series leading the charge. Many readers probably have fond memories of the quarterly book orders, when the teacher walked into the room carrying a big red and white box, as our class cheered, eagerly awaiting the Boxcar Children or Baby Sitter's Club book our parents had ordered for us.

The acquisition of Scholastic would probably come with a lot of cost-cutting options, as the distribution channels are similar. Shares of Scholastic have been stagnant for a decade, and not even Harry Potter has been able to send the company to new highs. They probably ought to start considering strategic alternatives soon, and the company's solid profitability could make it an interesting target for a strategic buyer.