McGraw-Hill Falls the Most in a Year on Lower Education Revenue

McGraw-Hill Cos. (MHP), the finance and publishing firm that’s splitting in two, fell the most in almost a year after reporting lower revenue in its education unit even as surging corporate debt sales bolstered its ratings business.

McGraw-Hill, whose shares are still up 21 percent this year, fell 3.7 percent to $54.43 in New York, the most since November 2011 and the lowest level since Sept. 26, according to data compiled by Bloomberg.

Revenue at its education division dropped 11 percent to $836 million in the third quarter, the New York-based company said today in a statement distributed by PR Newswire. Net income fell to $314 million, or $1.10 a share, from $365.6 million, or $1.21, a year earlier. Earnings excluding some items were $1.33 a share, beating the $1.31 average of analysts’ estimates compiled by Bloomberg.

McGraw-Hill’s Standard & Poor’s unit, the largest ratings company, reported $502 million in revenue, the highest total in 19 quarters, the firm said in the release. Companies from around the world tapped debt markets at the fastest pace ever in a third quarter with worldwide corporate issuance of $992.2 billion, according to data compiled by Bloomberg.

Revenue rose 2.3 percent to $1.95 billion, from $1.91 billion, Bloomberg data show. The company boosted its 2012 outlook to a range of $3.35 to $3.40 per share.

McGraw-Hill said in September 2011 it will break into two companies, one focused on financial information including ratings and the other on educational publishing. A decision on the expected sale or spinoff should be finalized “in the coming weeks,” the company said in the release.

The firm began a strategic review of its business in 2010. Jana Partners LLC, a New York-based hedge fund and investor in McGraw-Hill, proposed in August 2011 a plan to break up the company after education sales fell for three straight quarters.

Moody’s Corp., the second-largest ratings company, reported its highest quarterly revenue ever last week, Chief Executive Officer Ray McDaniel said on a conference call.

To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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