Pearson stock slumps
Bloomberg Business reports that Pearson has lost market value that is greater than the combined proceeds from the sale of the Financial Times and the Economist.
They continue to say ‘The shares fell as much as 8.7 percent Thursday, adding to Wednesday’s 16 percent slump — the biggest since at least 1988 — after the education company said full-year profit will be at the low end of its previous range of forecasts.
The two-day drop trimmed the stock’s value by 2.3 billion pounds ($3.6 billion). Pearson has agreed in recent months to dispose of the Financial Times newspaper and its stake in the Economist magazine for about $2 billion.
Multiple reasons caused this drop but Chief Executive Officer John Fallon blamed sales of fewer textbooks in South Africa as one of the reasons.
In the Pearson 9 Month Interim Management Statement:
In the first nine months of 2015, revenues declined by 3% in headline terms, due to the strength of sterling against key emerging market currencies; and declined by 1% at CER and in underlying terms, with growth in China and Venture markets, and stability in Brazil offset by continued weakness in South Africa.
Growth in premium English Language Learning in China, private sistemas and language schools in Brazil and our textbooks and educational services businesses in the Middle East were offset by declines in the K12 textbook market and university enrolments in South Africa, public sistemas in Brazil and the Chartered Accountancy test preparation business in India, and the transition of our three Saudi Arabian Colleges of Excellence to new providers.
Pearson is the world’s largest education company, with about 93 percent of revenue coming from sales of books, tests, and other learning materials.