Pearson's 2013 Earnings Stall

column | Enterprises

Pearson's 2013 Earnings Stall

Feb 25, 2013

PEARSON PROFITS EBB: John Fallon, who in January took the reins as the new CEO of education giant Pearson, delivered a grim earnings outlook today, namely that operating profits are likely to be flat in 2013. As a result, Pearson will cut jobs and speed up moving its products from print to digital format. Overall its sales grew a tepid 4% in 2012. International education was a strong division, growing 10% to $2.4 billion (1.6 billion pounds). By contrast, its North American education division grew 3% to $4 billion (2.7 billion pounds). Pearson's stock took a beating in the morning markets.

Fallon had some news for small companies hoping to cozy up to Pearson, namely the newly created "Pearson efficacy framework." Here's what he said:

"Running throughout this strategy is a process to ensure that our products and services deliver demonstrable learning outcomes to the student or the institution. We have therefore developed the Pearson efficacy framework: a unique, rigorous and scalable quality assurance system that checks that the necessary conditions are in place for an education programme to deliver intended learning outcomes. We now require that all Pearson acquisitions and all product investments over $3m go through the Pearson efficacy framework and set out a plan to implement its recommendations before approval .

"Through this process, we are accelerating the work that is already under way to transform Pearson from the world’s most international education publishing company to the world’s leading global learning services business. We believe it will provide Pearson with a larger market opportunity, sharper focus on the fastest-growing markets, stronger financial returns and a greater impact on educational outcomes."

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