Pearson Reports Sales Decline, 4,000 Jobs Dropped in Restructuring Process
By guest blogger Sam Atkeson
Pearson announced this week that 4,000 jobs—or 10 percent of its global workforce—will have been eliminated when the company’s major two-year restructuring program comes to a close at the end of this year.
The company also reported a sales decline of 6.5 percent in the first half of 2014, with revenues at $3.5 billion in 2014, down from $3.7 billion for the same six-month timeframe last year.
In a press conference, CEO John Fallon attributed part of the loss to what he called a “period of internal change and disruption”—referring to the company’s effort to shift investments away from portions of their operations that are not generating sufficient revenues, and toward “growth opportunities in digital, services and fast-growing economies.”
By the end of 2014, Pearson expects to have invested a total of $380 million in restructuring charges over the two-year period, but hopes, as a result, to save $145 million annually from 2015 on.
The job cuts are in line with the company’s plans for a strategic transformation, Fallon said according to a transcript of the call, and have primarily affected “print-related activities in mature markets.” The cuts will be offset partly by the creation of 1,800 jobs in the two-year period, Bloomberg reports.
Fallon also attributed the slump to currency movements, as well as curriculum changes in the United States and the United Kingdom, Pearson’s two largest markets.
The implementation of Common Core State Standards has been “slow and uneven, and it is hurting us this year,” Fallon said about the United States’ K-12 market, where Pearson has historically played a central role in developing curriculum and assessment materials.
Most recently, Pearson landed a contract to create exams matching common core standards for states that are part of the Partnership for Assessment of Readiness for College and Careers, one of two state consortia designing tests tied to the standards. The award to Pearson, the only bidder, is being contested. The PARCC states predict that the price of the assessment will be about $24 per student.
“We do expect things to start to improve in 2015,” Fallon added, stating that “even where states distance themselves from common core, they remain very much committed to implementing more rigorous college and career readiness standards.”
Fallon stressed that current performance is on track with the company’s expectations as announced in February, and maintained a hopeful outlook for 2015 overall.
“We are powering ahead in digital, in services and emerging markets, building a bank of deferred revenue, which sets us up very well for future growth,” Fallon said, adding that current restructuring investments will provide the company with “larger market opportunity, a more resilient business, and stronger financial returns in 2015 and beyond.”
[UPDATE: This post has been updated to clarify one portion of Fallon’s remarks.]