Pearson’s Share Price Falls 17%

Posted on 10/22/2015 by Jim Pickerell | Printable Version | Comments (0)

Pearson has cut its full-year guidance to investors in a dire warning about the continuing "cyclical and policy-related factors which have been hurting our markets for some years."  Its share price fell almost 17% to a value of $14.54 in New York. The company’s ADRs are now down 30.7% over the past six months.

CEO John Fallon said, “The key cyclical and policy-related factors which have been hurting our markets for some years have yet to improve.”
Pearson’s gross revenue in 2013 was £5,069 millions and dropped to £4,874 million in 2014. In an effort to focus its operations more on its core business of education Pearson sold its interests in the Financial Times of London to Nikkei of Japan on July 23, 2015 and its 50% non-controlling interest in the Economist on August 12, 2015. The company received $1.31 billion for the Financial Times and $731 million for its interests in the Economist.

Pearson is plowing the proceeds from the deals into its global education business, which includes textbooks in Western markets, digital learning programs and English language schools.

It has also restructured its operations and booked hundreds of millions of dollars in cost savings to counter a slowdown in mature educational markets and boost its push into emerging economies such as Brazil and China where there is greater demand for learning services.

Nevertheless, it is still struggling, particularly in the U.S. due to (1) lower community college enrollments, (2) the switch to Common Core and the slowness in many states to implement this educational strategy, and finally (3) the general trend to move to digital delivery of educational information and away from textbooks.

In emphasizing the shift from print to digital a year ago CFO Robin Freestone pointed out, “We are heading towards a target next year of about 70% of the revenues of the company digital and services and 30% books.”

Fallon also pointed out a year ago that much of Pearson’s future growth is likely to be in testing, teacher training and providing an overall management structure for the education process, rather than supplying more materials that require visual content. At that time Fallon said, “we are now very confident that we can sustain value and price that we can actually maintain or, even increase, average revenue per user in the switch from analog to digital.” But, the company seems to be struggling to deliver on that promise.

Pearson said third-quarter sales fell 2% compared with the same period in 2014. For the nine months of 2015, sales rose 2%.

Copyright © 2015 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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