Pearson To Slash 4,000 Jobs

   (FROM THE WALL STREET JOURNAL 1/22/16) 
   By Simon Zekaria 

LONDON -- Pearson PLC on Thursday said it was launching fresh cost-savings of half a billion dollars and planned to ax 10% of its workforce world-wide after cutting its earnings guidance.

The London-based company, which makes most of its revenue from educational services in the U.S., said it was cutting 4,000 jobs and had underestimated the effect of trading pressures across its main markets. The company plans to simplify its structure by merging businesses and focusing on fewer, bigger opportunities.

Pearson has raised $2.5 billion from disposals during the last three years, including its flagship publishing asset, the Financial Times newspaper, to fund its growth across global education, which includes textbooks in Western markets, learning programs and English-language schools.

In August, Pearson sold its 50% non-controlling stake in the publisher of the Economist magazine for $731 million. The disposal followed its sale of the FT Group for $1.32 billion.

But Pearson said rapid growth in employment and increasing regulation in the U.S. has resulted in higher-education enrollments falling approximately 10% to about 19 million in 2015 from a peak of around 21 million in 2010. It also said certain enrollments in the U.K. have fallen, and purchases of textbooks in South Africa had dropped significantly.

"In combination, these factors have reduced Pearson's operating profit by approximately GBP 230 million from its peak. We overestimated how quickly those markets would return to sustainable levels of revenues and profits from their peak," the company said.

(END) Dow Jones Newswires

January 22, 2016 02:47 ET (07:47 GMT)

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