Publisher John Wiley & Sons Inc said it is planning a major digital push to grab a bigger slice of the lucrative e-book market, which is witnessing an explosive growth, fueled by the popularity of tablets and e-readers.
Some of the larger publishing houses have 25-30 percent of sales from e-books. We hope to achieve those levels, Chief Executive Stephen Smith told Reuters in an interview.
E-books represent 11 percent of the company's professional/trade (PT) unit sales, which account for 23 percent of overall revenue, and their sales saw strong growth at Amazon Inc's Kindle store and Apple Inc's iBookstore.
In the first quarter of this year, we have seen a three-fold rise in e-book sales at our professional and trade segment, Smith said. We expect to see e-books becoming a much larger proportion of our revenue.
The 204-year old company -- which started off as a publisher of 19th century American authors like Washington Irving, Herman Melville, and Edgar Allan Poe -- is now known for brands such as For Dummies instructional texts, Frommer's travel guides, Betty Crocker cookbooks and Wiley-Blackwell academic journals.
Digital sales, which include e-books and other products and services, accounted for 40 percent of the company's total revenue across all its segments in fiscal year 2011.
Digital sales comprised 59 percent of scientific/technical/medical/scholarly (STMS), 10 percent of PT, and 16 percent of global education revenue. While e-books make up 16 percent of STMS, 7 percent of PT and 5 percent of global education revenue.
The company's STMS unit, its largest by sales, was the first to migrate to digital in 1995 followed by its global education unit.
Wiley also signed sales agreements with Amazon Germany, ChristianBooks.com, and Blio in the first quarter to push e-book sales.
Its larger rivals include McGraw-Hill Companies Inc, Reed Elsevier Plc, Pearson, Axel Springer AG.
ALLIANCES & ACQUISITIONS
While growth in Asia, which accounts for about a fifth of the company's revenue, continues to be strong, Wiley is also looking to enhance its digital content through services acquisitions, partnerships and in-house development.
We are finding sources of growth in more mature markets in North America and Europe particularly through expansion of services, Smith said.
Smith, who is undergoing cancer treatment, said the company is looking at technology to speed its digital transition and move to content-based services and it is vigilantly looking at strategic opportunities at the right price.
Wiley is interested in acquiring companies that helps build capabilities in search technology, content enrichment, semantic tagging, distance learning, curriculum development, test preparation, among others.
The company generated $270 million of free cash flow in 2011 and said it is comfortable making large acquisitions.
Wiley's $1.12 billion buy of UK's academic journal and reference book publisher Blackwell Publishing in 2007 was its most recent and largest acquisition in its history.
The Hoboken, New Jersey-based also reaffirmed its profit outlook of $3.15-$3.20 for the year on mid-single digit revenue growth. At constant U.S. dollar rates, the company expects to add 10 cents a share to profit.
With regards to Apple taking a 30 percent cut on sales through its App Store, the company said it is absolutely not coordinating with our competitors regarding negotiations with Apple on any terms or pricing.