Pearson Stock Stumbles After Slashing Earnings Forecast

Pearson Stock Stumbles After Slashing Earnings Forecast

POOF GOES THE POUNDS: Once flush with cash after selling The Financial Times and its stake in The Economist Group for $2 billion, Pearson’s stock has nosedived down the drain. Shares of the company fell 16 percent on Wednesday—wiping out $2.5 billion in stock value—after it lowered its profit forecasts. Third-quarter sales dipped 2% compared with the same period last year. The company attributed the poor results to declining US college enrollments and South Africa textbook sales in its prepared statement:

Cyclical and policy related factors made some of our largest markets weaker than we expected with, in particular, lower Community College enrolments and higher returns affecting the US higher education market; and lower purchasing in certain provinces affecting the school textbook market in South Africa.

“What’s happening now is somewhat frustrating because we’ve gained share in all our major markets, but they are weaker than we thought they’d be at the start of the year,” Fallon told Bloomberg. He added: “The factors against us now are cyclical and they’ve been more persistent than we thought.”

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