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Show Mi MSsiain: fin Erasfe i A number of favorable factors fac-tors are joining together to provide a bright outlook for the book publishing industry. THE COMPANIES are scoring consistently higher earnings because of improved management controls, diversification, diver-sification, and implementation implementa-tion of the newest computerized com-puterized printing technology. tech-nology. Also, the managements are more attuned to demographic and other socioeconomic changes. SO, THE renewed trend back to vocational, professional, profes-sional, and hobby-leisure markets is being accomplished ac-complished with the utmost efficiency, successfully countering coun-tering the short-term slowdown slow-down in business from elementary and high school sectors that has stemmed from a decline in school enrollments and a lower rate of growth in federal and school funding. The Research Department of Babson's Reports feels that the industry is well positioned for the anticipated resurgence resur-gence in the school population some time during the early 1980s. INCREASED enrollments in career-related and continuing con-tinuing education programs should provide book publishers with substantial earnings buoyancy along with their other allied income-producing income-producing operations during that period. Mergers between U.S. book-publishers book-publishers themselves, between U.S. and foreign publishing companies, and even overtures from multiform multi-form (conglomerate) non-publishing non-publishing giants attest to ihe current attractiveness of the thriving book publishers, especially es-pecially because of the depression-resistant characteristic char-acteristic of this industry. Further indication of its strength ft seen in the fact the outstanding publishing company com-pany stocks are faring rather well in this uncertain market environment. THE BOOK publishers are looking forward to the 1980s (starting even before 1985) when a new generation of school-age children will be entering school. Their market researchers are optimistically optimis-tically predicting that a boom in sales to elementary schools will be the result. And it may be expected that in the return to basics more of the educational dollar will be spent for the more expensive and more profitable hardcover hard-cover instructional books, particularly In view of the reduction in school personnel which is looked for over the next several years. MANY OF the dollars usually allocated for teachers' salaries In the past may well be distributed In coming years for standard hard-cover Instructional material. Overall, the standard hardcover hard-cover text is the most profitable profi-table part of the estimated H7billion U.S. book business recorded during 1978. This compares with the $4.2 billion registered in 1977. The Research Department of Babson's Reports is not recommending stocks of any of its regularly supervised major book publishing companies com-panies for purchase at this market stage. TWO OF ITS previous buy recommendations are now involved in possible merger takeovers: Western Publishing Company and McGraw-Hill (the latter is resisting a tender offer). Our other supervised companies-Addison-Wesley, Houghton Mifflin, and MacMillan--merit our strong hold advices. The attractive qualities of some of the outstanding book publishing company stocks could make for further sizable siza-ble advances in the price of their securities, and could very well be rewarding for patient holders. NEVERTHELESS, we ( refer to sit tight with the securities of these companies at this time rather than to make new commitments, 'since investor enthusiasm may be limited for a while. . |