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To: Robert Rose who wrote (54419)	5/1/1999 7:57:00 AM
From: Glenn D. Rudolph	Respond to of 164684

LONDON, April 29 (Reuters) - Britain's biggest high street bookseller W.H. Smith Group Plc on Thursday saw its shares retreat on doubts about its new on-line ventures and worries about flat current sales. Smith, which owns Internet Bookstore, reported a fall in first half profits as it announced plans to sell books via digital TV. The retailer will start selling books in September through an interactive digital television service called Open, a joint venture between BSkyB <BSY.L>, British Telecommunications Plc <BT.L>, HSBC Holdings Plc <HSBA.L> and Matsushita Communication Industrial Co Ltd <6781.T>. Open has also signed up Airtours' <AIR.L> Going Places, Abbey National <ANL.L> and English premier league soccer team Manchester United <MNU.L>. Chief Executive Richard Handover said the group also planned to expand its new Internet service -- WHSmith Online -- launched on Monday. "We're already doing some very exciting things with potential new partners," he told a telephone news conference. Handover declined to predict when WHSmith Online would make a profit. "Obviously we're seeking to create enough commerce through this to offset the cost of development." Smith's shares have surged on the back of its involvement in the Internet, initially via Internet Bookshop, bought last year. They hit a high this year of 792 pence, but were more than five percent down on Thursday at 716 pence. Retail analysts said doubts about money-making capacity of the Internet business plus concerns about sluggish current trading at Smith's high street chain had hit the shares. "The Internet operation has some strategic value," said one analyst, "but it's not going to be a serious source of e-commerce revenue given the competition in Smith's markets." Analysts said a fall in U.S. Internet bookstore Amazon.com's <AMZN.O> shares on Wall Street had probably also affected sentiment. Handover said Smith's new Internet service was not chasing British market leader Freeserve, owned by electricals retailer Dixons <DXNS.L>. Smith Online was specifically targeting education and the family, he said. Freeserve, introduced last autumn, was the UK's first free Internet service provider, but now has some 50 rivals, including supermarket Tesco <TSCO.L>. Smith's pre-tax profits in the half year to end February were 105 million pounds ($169.5 million), down from 128 million. Total sales fell to 1.3 billion pounds from 1.6 billion. Earnings per share were 30.1 pence against 31 pence. The dividend proposed was 5.75 pence, up 10 percent. Smith said the comparative figures were complicated by the disposal during the second half of the year to August 31 1998 of certain retailing businesses, whose profits were concentrated over Christmas. Handover said the results were acceptable given difficult trading conditions, but the integration of the John Menzies chain, which Smith bought last year, were behind plan. The chief executive said Smith was also reviewing its share buy-back programme given the rise in its shares and was looking at other ways to enhance shareholder value. Analysts, who estimated Smith would have some 200 million pounds in cash at the year end, said some of the money could go on acquisitions or licensing deals linked to the Internet. Smith's Internet sales reached three million pounds, year on year, with orders since December 1 1998 up 135 percent on the previous year. Analysts predict sales of six to seven million pounds for the full year.