Children's education, publishing and media company Scholastic (Nasdaq:SCHL) posted wider losses in its seasonally weak first quarter. The company traditionally has slower sales and earnings during the summer when schools aren't in session. Still, the company's revenue and earnings underperformed last year's first quarter results.

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Earnings Take A Summer Vacation
Scholastic lost $35.2 million or a net loss of 98 cents per diluted share in its first quarter ending August 31, compared to a net loss of $23 million or a net loss of 63 cents a share in Q1 2009. Continuing operations earnings showed a loss of 95 cents compared to a loss of 68 cents per share loss in last year's quarter. Revenue slipped to $290.9 million from $315.6 million.

The educational publishing division saw a drop off in revenue to $118.6 million from $148.7. A lower amount of federal stimulus funding this year's quarter was the main reason. Children's book publishing revenue was $72.8 million versus $76.2 million. International revenue rose to $81.9 million from $75.6 million in the year ago quarter.

Scholastic continues to invest in its digital segment, repurchased $9.7 million of its stock and announced it will repurchase up to $150 million of its common stock. (For related reading, see A Breakdown Of Stock Buybacks.)

Scholastic also reaffirmed guidance for the rest of its fiscal year. Wall Street saw the U.S. publisher of Harry Potter books as still being in a strong position in its industry, as buying sent the stock up after the earnings announcement.

Educational Publishing
Despite Scholastic's larger than expected seasonal losses, the educational publishing field remains lucrative. Business and educational publishing giant McGraw-Hill Cos. (NYSE:MHP) has remained profitable through the recession. While its earnings turned down in fiscal 2009, the company has seen an earnings resurgence this year.

Other business education publishers such as John Wiley & Sons (NYSE:JW.A) have found the last couple of years even more lucrative. Global business publisher Pearson (NYSE:PSO) has likewise found the business publishing climate healthy, and has strong estimates that say this should continue this year. Scholastic is moving more into the digital and ebook area, where business publishers such as Thomson Reuters (NYSE:TRI) are already introducing new products, such as its multi-functional Eikon for financial professionals.

Scholastic's Business Opportunities
Scholastic has a unique mix of business and finds itself strongly positioned in a niche, educational publishing, which is hardly over-populated. Other business and education publishers such as McGraw-Hill and John Wiley don't quite have the same student connection as Scholastic does with its products. Book fairs, book clubs, as well as the close identification children can develop with Scholastic's books gives Scholastic a unique business opportunity to expand its digital, ebook online promotions and media products in the future. While Scholastic is probably never going to be a red hot business, its embedded place in the educational sector should continue to give it solid standing as a quiet, potentially profitable long-term investment.

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