If you ever needed a business lesson on the folly of putting all your eggs in one basket then look no further than the publisher of the Harry Potter series of books.

Despite the phenomenal worldwide success of the boy wizard franchise, publisher Bloomsbury saw its annual profits fall by 74% in 2006.

The main reason is the fact that there was no new Harry Potter released last year.

Reporting its 2006 results, Bloomsbury’s pre-tax profit dropped to £5.2m from £20.1m in 2005, when the most recent book about the teenage wizard – Harry Potter and the Half Blood Prince – was released.

The seventh and more importantly the final book in JK Rowling’s series – Harry Potter and the Deathly Hallows – is released this July. The demise of the hugely popular series has been known about for some time and many City analysts have been questioning whether Bloomsbury has a sufficiently strong fallback position to off-set the loss of the main money-spinner.

These poor set of results, plus an unwillingness to discuss future plans in any great detail, has seen the publisher’s shares slide and increased the pressure on those at the top.

Acknowledging 2006 as a “challenging year”, the publisher’s chairman Nigel Newton said the company did have a clear and on-going strategy to identify “new authors, internet initiatives and acquisitions”. However, many commentators believe the publisher has been a little too slow in bringing forward such a strategy.

Although July’s publication of the last Harry Potter book is as close to a sure-fire global best-seller as you’ll ever find, it is not enough to sustain the company’s medium-term and long-term position.

It really isn’t a complicated conundrum worthy of exercising the boy wizard and his fellow magic wand waving chums. Yet Bloomsbury continues to struggle to find a solution to what is a fairly basic business puzzle.

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