This is kind of a shock, and kind of not. Houghton Mifflin nearly went into bankruptcy two years ago. They dodged it that time by restructuring their debts. That's not something you can keep doing indefinitely.
The real problem is that they're on the wrong side of some major market shifts. HM's trade titles are the tip of the iceberg. Their real strength has always been in elementary and high school textbooks and instructional materials. That used to be a stable market. But public school budgets have been scraped to the bone for years now, and they've gotten worse since the economy collapsed, so school districts have cut way back on new book purchases. That's probably the big reason HM has bled out.
Their trade list hasn't been doing well either. Straw in the wind: Houghton Mifflin is not one of the publishers that have been pushing back against Amazon's ebook pricing schemes. Lord of the Rings was for decades a staple of HM's hardcover and trade paper backlist. The Kindle edition of LOTR, all 1178 pages of it, sells for $9.99. That's not enough to bring down the house, but it hurts. It's not healthy.
I'm not an expert. I don't know who's in charge of overall marketing strategy at HM, or what kind of operating constraints they work with. Still, it feels like watching someone who's concentrating as hard as they can on picking the walnut that has the pea under it, when they should be figuring out that they're in an unwinnable game.
For instance, in January of this year, HM entered into an agreement with Amazon to publish hardcopy editions of Amazon's high-prestige Kindle-only titles. Everyone figured that was about circumventing Barnes & Noble's rule against selling titles in its brick-and-mortar stores that have ebook editions B&N can't sell on the Nook. Since HM doesn't publish the ebook editions, its editions aren't subject to B&N's automatic ban.
What can you say, except "good luck with that, and drop me a line when you respawn." It's not like B&N wasn't going to notice. They could still decline to carry those titles on a case-by-case basis, and in the meantime, Houghton Mifflin had pissed them off. That's not a good position to be in.
I'm not sure it would have been a good position in any event. Those titles are high prestige, but many of them aren't high-volume sellers. That's not a problem for Amazon, but it is for a conventional publisher that has to deal with overhead costs and economies of scale. The only benefit I can see is that it helps keep Amazon's big-name authors happy. They get to have a tangible edition in bookstores and on the brag shelf, published by an old and distinguished firm.
Sorry. Getting into Inside Baseball territory here.
I doubt HM will simply go out of business. There's too much value in its catalog. But its days of operating as a self-willed publisher may well be over.