It warned of potentially tough times ahead for the UK music industry

It warned of potentially tough times ahead for the UK music industry. Despite the denial, traders remained convinced that the company will soon be taken over and piled into the stock, pushing it 2p higher to 99.5p “There are no talks going on. We’re concentrating on organic growth,” said the spokesperson. Since KPN’s offer for mmO2 last month, which the UK group rejected, trading in mmO2 shares has been dominated by speculation of a new bid for the company.HMV, unchanged at 217p, was held back by Deutsche Bank, which told clients that the group’s share price is unlikely to rise any further following its recent strength. The defence group is expected to appoint a new chairman at May’s annual meeting, which CSFB forecasts will buoy sentiment towards the stock. The broker yesterday set a 225p price target on BAE.Elsewhere, Lloyds TSB rose 4.75p to 409.75p after Eric Daniels, the bank’s chief executive, was heard to have had a bullish meeting with analysts at UBS on Monday night.The wider FTSE 100 index dropped 15 points to 4,318.5Among telecoms, a spokesperson for mmO2 denied rumours that the mobile phone group is in bid talks with Japan’s NTT DoCoMo or any other group. Only last week the group confirmed that India’s £800m Hawk jet order had progressed to the stage of becoming a binding contract There should be more good news to come for shareholders.

Concerns that BAE Systems is to launch a counter offer for the defence group Alvis, where it already has a 28 per cent stake, have weighed on its shares recently. Credit Suisse First Boston dismissed such a scenario outright yesterday and this helped revive the BAE stock, leaving it as one of the best performers in the FTSE 100, up 5p at 190.5p. In a bullish circular to clients, CSFB went on to note that the strength of the oil price, amid ongoing tensions in the Middle East, is very positive for BAE. Saudi Arabia, a major client of the company, raises cash for its defence programme by selling fixed amounts of oil on international exchanges. With the price of crude rising, so will these revenues, leaving it with more money to spend the latest defence kit on offer from BAE.Meanwhile, newsflow out of BAE has been rather positive in recent weeks and CSFB believes this is yet to be adequately reflected in the company’s valuation.

The key for Bloomsbury shareholders is how Mr Newton uses it. “You only have to look at Tolkien to be reminded that some of the biggest books are the children’s classics written many decades ago,” he says.But this year, Harry Potter may be big but other developments at Bloomsbury will be bigger, at least as far as the company’s long-term future is concerned. “The important thing about 2004 is that we will see bigger contributions from some of our previous investments and acquisitions. We will see the first full 12-month contribution from Berlin Verlag while our biggest growth prospects are in the US,” says Mr Newton.. The wizard movies belong to Warner Brothers, while all the merchandising is licensed to various toy manufacturers around the world.That said, what rights it has to Harry Potter are currently generating at least £40m a year for Bloomsbury. Such a valuable endowment is helping the company generate operating cash flows of £14.65m. At the end of 2003 its net cash position stood at £28.32m and shareholders’ funds were £58.8m.Harry Potter represents a valuable annuity income, presumably stretching far into the distance.

So the two book markets bigger than Britain, Germany and America, are outsideBloomsbury’s grasp as far as Harry Potter is concerned. Another recent bestseller on Bloomsbury’s list was Schott’s Original Miscellany, a surprise hit ever since it appeared in 2002. In fact while Bloomsbury is still almost universally known for its Harry Potter associations, its interest in the global franchise is actually quite modest.Its ownership of the character extends to the English-language publishing rights around the world, but not in the US Foreign-language rights are also excluded. Then in July 2000 we bought A&C Black, a long established publisher of reference works.” Since then Mr Newton has added more reference works such as Who’s Who and Whitaker’s Almanack.Born in California, the 48-year-old Mr Newton has now built a business that would certainly stand alone these days even if he had never heard of Hogwarts and the rest. One analyst said yesterday: “If you split Bloomsbury in two and separate out the Harry Potter business you would still be left with a publishing business that most bigger houses would be extremely envious of.” Bloomsbury’s other fiction authors include the likes of Donna Tartt, whose second novel, The Little Friend, was Bloomsbury’s biggest seller on its adult fiction list last year. Its paperback titles were further strengthened in 2003 when the full paperback rights to the back list of Michael Ondaatje, including The English Patient, reverted to Bloomsbury from a third-party publisher.It publishes other big names such as Joanna Trollope and owns such non-fiction classics as Peter Collin dictionaries, a share in the Encarta reference works, and Wisden Cricketers’ Almanack.