Thursday, January 19, 2017

Pearson Stock Falls 30 Percent; Worst Day Since 1986 | deutsch29

Pearson Stock Falls 30 Percent; Worst Day Since 1986 | deutsch29:

Pearson Stock Falls 30 Percent; Worst Day Since 1986

Three years ago, in 2014, education and publishing mammoth Pearson expected to make a killing on the Common Core State Standards (CCSS).
I wrote about Pearson’s CCSS profit expectations in this post based upon Pearson’s February 2014 earnings call.
I noted that when one market analyst pressed for an alternative plan of action in case CCSS did not work, Pearson CEO John Fallon had nothing to offer.
Fallon seemed to believe that Pearson’s profits from CCSS were a sure thing.
Cut to the Financial Times on Wednesday, January 18, 2017, which stated that Pearson’s shares dropped “as much as 30 percent” on that day– hitting their lowest since 1986.
The market price per share at the close of 01-18-17 was $7.13.
The next lowest price for Pearson stock was $7.72 per share in February 2003– 14 years ago.
Fallon described the Pearson drop (plunge?) in stock as “deterioration.”
But wait– there’s more:
Fallon apparently told investors that he expected US profits “to fall by a further 6 to 7 percent” in 2017.
There is no mention of CCSS in the January 18, 2017, Financial Times article; instead, the focus is on unexpected drops in student enrollment in college coupled with “a surge in the textbook rental market.” The January 18, 2017, Telegraph notes that Pearson’s unanticipated profit loss to textbook rentals is to textbook rentals to Amazon.
One year ago, in January 2016, Pearson announced it would be cutting 4,000 jobs.
The Financial Times reports that Fallon says that he is not yet ready to resign as Pearson’s CEO. I wonder how long Pearson’s board will allow him to call the shots on his own employment.
Not long, perhaps: According to the January 18, 2017, Telegraph, stockholders are pressuring the board to cut Fallon loose.
Fallon has been CEO since 2014– the same year of the earnings call in which he Pearson Stock Falls 30 Percent; Worst Day Since 1986 | deutsch29:

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