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Thursday, August 24, 2006

The Future Isn't Future



Future Publishing have issued another profit warning, their sixth in the last two years. This is beginning to smell like a company in meltdown - again. Future took an enormous bruising in the bursting of the dot com bubble with its reliance on technology publishing.

It is not a bubble bursting that is causing the trouble this time. It is the singular failure to manage the chronic decline in news stand sales and advertising. The current CEO, who replaced Greg Ingham has only been in the chair for a few months can't get the blame, but she has a short window to sort out his strategy. Expect closures,cost cutting and a new focus on digital publishing (this was promised at their last results presentation)

I think this is a company in trouble. Just take a look at its share price (see graph). The acquisition of titles from the bust Highbury House has proved a mistake, with just £800k of EBIT delivered in the first half, compared with an expecatation of £2.5m, the digitial strategy is late and ill co-ordinated and the business is looking in danger of having rather more debt thatn its current level of earnings would make a prudent CEO comfortable with.

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