Pearson warns of profit fall in 'short but difficult' digital transition
- U.K.-based publishing giant Pearson PLC reported a drop in profits Friday, with earnings per share dropping 15% to 70.1 pence per share after restructuring costs were taken into account.
- The company, which in the middle of restructuring, also issued a warning that profits would fall further, possibly as low as 62 pence per share, for 2014.
- Pearson has been restructuring as demand has fallen for traditional paper-based products in its education business, particularly in North America, which Chief Executive John Fallon noted "is facing the most difficult trading conditions in a decade."
Let's face it: The paper textbook is on its way out. Faculty and students know it, and so does Pearson. Education products — textbooks and software at both the K-12 and higher ed level — account for 75% of its revenue, and 60% of that comes from the U.S., where an increasing number of students with mobile devices at all levels of education are making cost-effective digital textbooks a much more attractive option.
Of course, this all plays into why the publisher is restructuring. The company expects its transition from print to digital to show profit by 2015, and that move won't just give it a more modern product — it will do away with much of the costs associated with producing print materials, as well.
- The Wall Street Journal Pearson Issues Profit Warning as U.S. Unit Hits Earnings
- Seeking Alpha Pearson Management Discusses 2013 Results - Earnings Call Transcript
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