UPDATE 3-S&P helps McGraw-Hill earnings rise 44 pct

* Q4 EPS 53 cents; Street view 40 cents

* Revenue up 3.3 pct

* Shares up as much as 2.8 pct
(Adds share price, comments from call, detail on S&P)

By Elinor Comlay

NEW YORK, Jan 26 (BestGrowthStock) – McGraw-Hill Cos Inc (MHP.N: )
reported higher-than-expected fourth-quarter earnings as a rise
in corporate debt issuance fueled its Standard & Poor’s ratings
unit.

Its shares rose as much as 2.8 percent on Tuesday after the
company said profit jumped 44 percent to $167.3 million, and
Chief Executive Harold McGraw III made positive comments about
the outlook for 2010 on a call with analysts. Net income for
common shareholders increased to 53 cents a share from 37 cents
a year earlier,

Excluding items such as a 2 cent-per-share gain from its
sale of BusinessWeek magazine in December, earnings beat
analysts’ average estimate of 40 cents a share.

Revenue increased 3.3 percent to $1.46 billion.

S&P revenue, hurt in recent quarters as tight credit
markets caused a sharp drop in ratings volume, soared 19.4
percent in the fourth quarter to $473.4 million. Full-year
revenue for the S&P credit market services unit slipped 0.4
percent on the year earlier to $1.7 billion.

“Improving financial market conditions are clearly making a
difference in the worldwide outlook for S&P,” McGraw said on a
call with analysts.

Compliance costs increased in 2009 by about $20 million
compared with the previous year, the company said, largely as a
result of increased regulation of the credit ratings business.

Ratings agencies like S&P and its main rival Moody’s
Investors Service, owned by Moody’s Corp (MCO.N: ), came under
fire for fueling the financial crisis by assigning high ratings
to toxic mortgage-backed securities that later defaulted.

Stepping up regulation of the ratings agencies was a key
focus for lawmakers but reform proposals currently on the table
have steered clear of requiring sweeping changes, such as
altering the so-called “issuer pays” business model.
[ID:nN30220023]

Moody’s reports fourth-quarter results on Feb. 4.

Separately, McGraw-Hill said its higher education,
professional and international group also reported a pickup in
revenue in the fourth quarter, as it sold more textbooks and
other educational services to U.S. college students. The
education unit broadly is expected to do well this year, as
schools spend more on books. At the same time, the U.S. college
market is expected to grow 5 percent to 7 percent, McGraw
said.

The company broadly expects earnings per share of between
$2.55 and $2.65 in 2010.

McGraw’s shares were up 1.9 percent at $34.02 on the New
York Stock Exchange, down from a morning high of $34.32.

Stock Trading

(Reporting by Elinor Comlay; editing by Dave Zimmerman and
Maureen Bavdek)

UPDATE 3-S&P helps McGraw-Hill earnings rise 44 pct