Thomson Earnings Surge 65%; Sale of Education Unit Expected
Electronic publisher Thomson reported a 65% jump in first-quarter profit and said it expects to announce a buyer for its education division at the end of the second quarter.
The company said the division, which it put up for sale last year, has attracted a high level of interest, and that it expects the sale to close in the third quarter. Analysts have estimated the sale could fetch $5 billion.
Thomson earned $224 million, or 35 cents a share, in the three months ended March 31, up from $137 million, or 21 cents a share, in the same period a year earlier.
Adjusted earnings, which excluded $35 million of one-time tax benefits, as well as other income and results of discontinued operations, were $145 million, or 23 cents a share, up from $131 million, or 20 cents per share.
Revenue rose 10.6% to $1.67 billion from $1.51 billion, boosted by a 10% rise in Thomson's legal segment and an 8% rise in its financial unit.
About 85% of revenue came from electronic products, Thomson said.
According to Reuters Estimates, analysts were expecting the company to earn 20 cents a share before one-time items, on revenue of $2.03 billion.
The company said in October it would sell its Learning unit, after deciding it no longer fit its strategy as it moves to focus on electronic products. The businesses in the division provide textbooks and online courses to government, companies and schools.
Private equity groups Kohlberg Kravis Roberts and Carlyle Group have entered the race for the unit, according to a published report this month.
In March, sources close to the process told Reuters that Bain Capital, Blackstone Group and Thomas H. Lee Partners were also bidding for Thomson Learning.
"I want to emphasize that we are using a disciplined, measured approach to investing the proceeds in opportunities that have business models similar to ours," chief executive Richard Harrington told analysts in a conference call.
He did not elaborate specifically on how and where Thomson will spend the money.
Thomson competes with Reuters Group in providing financial data and news to clients.
The company has also been working at clamping down on costs to boost its profitability.
"Our efficiency initiatives are taking hold," Harrington told analysts. "Operating margins in the businesses are rising as we reduce our cost base and increase effectiveness across the organization."
Thomson reiterated a 2007 forecast calling for revenue growth at the high end of the company's target range of 7%-9% before the deployment of proceeds from the sale of the Learning unit.