NEW YORK ( TheStreet) -- The McGraw-Hill Companies ( MHP) saw earnings rise during the second quarter but was forced to lower expectations due to volatility in key markets.

The company announced today that it expects earnings for the year to come in at the low end of its guidance range of between $2.55 per share and $2.65 a share as a result of "choppiness" in some of its largest markets.

For the quarter ended June 30, the company saw earnings increase 16.4% to $191.1 million, or 61 cents per diluted share, compared with earnings of $164.1 million, or 52 cents per share, in the same period a year ago.

Revenue was flat at $1.47 billion. Financial services revenue rose 1.6 percent to $684.8 million from $673.8 million while the education segment saw an increase of 1.8% to $565 million from $555.2 million. However, revenue for the information and media segment fell 5.1 percent to $224.2 million from $236.2 million due to the sale of BusinessWeek.

"Solid results in the U.S. college and university market, a strong performance by Standard & Poor's indices, and strength in the global energy information market helped offset some softening in credit market services in the second quarter," said Harold McGraw, chairman, president and CEO of The McGraw-Hill Companies.

Revenues were weighed down by lower-than-expected sales in California, South Carolina and Indiana. Education budgets have also been slashed at the state and local level across the country. As a result, the company reeled back its estimates for the available state new adoption market to a range of $825 million to $875 million, compared with earlier estimates of the market ranging from $875 million to $925 million. McGraw-Hill's education group believes it can claim 30 percent of this reduced state adoption market.

The company reported that its digital products are producing double-digit growth in its professional market. In pushing towards a digital transformation, McGraw-Hill recently partnered with Blackboard ( BBBB) and expects to see continued revenue growth in the upcoming quarter through this digital investment.

Benchmark media analyst Edward Atorino lowered his earnings per share expectation to $2.55 from $2.61 following the company's report. While the company may see revenue from its developing online business, Atorino doesn't believe it will be enough to pull up the much larger, struggling non-digital segments.

For the first half of the year, earnings rose 29.6% to $294.4 million, or 94 cents per share, compared with earnings of $227.1 million, or 73 cents per share, in the same period a year ago.

Revenue rose 2% to $2.67 billion from $2.61 billion. Revenue from the company's education segment increased 1.7% to $882.2 million from $867.8 million.

Management hopes sales will rise in the next quarter as the economy picks up. "It's really going to depend on the recovery act federal stimulus -- $11.5 billion is scheduled for spending in 2010," said McGraw said during a conference call. "We ought to see some very important support in some of the key states."

Shares of McGraw-Hill are down more than 3% to around $29 in afternoon trading.

-- Reported by Theresa McCabe in Boston.

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