Pearson tanks on profit shock and talk of Penguin Random House stake sale
London — Troubled British publisher Pearson toned down its two-year profit guidance, cut its 2017 dividend and said it might sell its Penguin Random House stake to battle "unprecedented" changes hitting its key markets. Shares in Pearson plunged 23% on disclosure of its latest attempt to deal with disruption due to its move to digital publishing, piling pressure on CEO John Fallon. It came after a string of profit warnings in recent years. The 173-year-old group, which sold the Financial Times and its stake in The Economist magazine in 2015 to focus on education, was hit by US economy recovery encouraging more people to get jobs rather than go to college. Net revenue in the North American higher-education courseware market fell 30% in 2016’s last quarter with students increasingly using second-hand books and hiring courseware. "The education sector is going through an unprecedented period of change and volatility," Fallon said. "Our higher education business declined further and fas...
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