UPDATE 2-McGraw-Hill to cut over 600 jobs, take quarterly charge

(Adds comments from McGraw-Hill CEO, dateline SAN FRANCISCO)

SAN FRANCISCO/NEW YORK, Jan 8 (Reuters) - McGraw-Hill Cos Inc (MHP.N), which publishes educational books and magazines and owns the Standard & Poor's credit rating company, said on Tuesday it is eliminating 611 jobs and may cut more.

The company said it has had an unofficial hiring freeze since autumn, and on Tuesday it announced the elimination of about 3 percent of its work force.

"Hopefully, this does it, but we're prepared to do a third tier if necessary," Chief Executive Harold McGraw told investors later in the day at a Citigroup conference in Phoenix.

The cuts will result in a $43.7 million pretax restructuring charge and reduce fourth-quarter earnings by $27.3 million after taxes, or 8 cents per share, McGraw said.

"For 2007, we still expect double-digit earnings per share growth" excluding the restructuring costs and other charges, McGraw said.

McGraw-Hill announced its cuts one day after Moody's Corp (MCO.N) -- the parent of S&P's main rival, Moody's Investors Service -- announced 275 job cuts to cope with falling demand for credit ratings as capital markets worldwide tighten. Both companies are based in New York.

McGraw said his company was projecting 1 percent U.S. GDP growth in the first half of 2008 and then more robust growth that would bring the country's GDP average to about 2 percent for the year.

"The problem is that when we talk about the consumer, it's going to feel recession-like," McGraw said.

McGraw said the 611 job cuts would affect every division of the business. The McGraw-Hill financial-services unit, which includes S&P, will account for 172 of the job cuts and $18.8 million of the charge.

The education unit will account for 304 job cuts and $16.3 million of the charge.

The information and media unit, which includes Business Week, Aviation Week and J.D. Power & Associates, accounts for 114 of the job cuts and a $6.7 million charge.

Corporate activities account for another 21 job cuts and a $1.9 million charge, McGraw-Hill said.

McGraw-Hill shares closed down $1.79, or 4.2 percent, at $40.59 on the New York Stock Exchange on Tuesday. They have fallen 39.1 percent in the last year. Moody's shares have fallen 51.5 percent over that time. (Reporting by Jonathan Stempel, Amanda Beck, Philipp Gollner; Editing by Gary Hill)