Scholastic's 2Q profit drops 25 pct; to cut costs

NEW YORK (AP) -- Fading demand for the best-selling "The Hunger Games" trilogy and weaker sales of profitable education technology drove publisher Scholastic Corp.'s net income down 25 percent in its latest quarter. The company plans to cut costs to help compensate.

For the fiscal second quarter, which ended on Nov. 30, profit came to earned $61.8 million, or $1.89 per share, down from $82.8 million, or $2.60 per share, in the same quarter last year.

Revenue fell 10 percent to $616.2 million from $685.3 million, as revenue at its children's book publishing business fell 11 percent to $350.1 million, mainly as a result of lower "Hunger Games" sales. Book club revenue fell 21 percent as schools in the Northeast were closed because of Superstorm Sandy, which struck the East Coast in late October.

Revenue at the company's lucrative educational technology division dropped 20 percent to $52.2 million as strapped public schools shifted spending to help them prepare for curriculum changes that many states are adapting.

The company said it was cutting costs and hoped to save $20 million to $30 million over the next five months. The company wants to cut costs so it can increase spending on technology-based learning products, e-books and other digital initiatives in an attempt to modernize its business. It is also looking to expand in Asia.

The company said it still expects to post 2012 earnings from continuing operations of between $1.40 and $1.60 on revenue of between $1.8 billion and $1.9 billion. That's a decline from the year ended May 2012, it posted adjusted earnings per share from continuing operations of $3.70 on revenue of $2.15 billion.