This is a few days old but worth reading. It came up during research for the new "People's Education for People's Power" anti-privatisation web site. The comments are included. It looks like this company is a house of cards. But Pearson's troubles are no reason to slow down the anti-privatisation campaign. "If you don't hit it, it won't fall!"
_____ Telegraph, The.gif Pearson chief brands critics 'naive and ignorant' as company cuts 4,000 jobs Education market will not face the same digital disruption as record labels, says under-pressure boss John Fallon Christopher Williams, The Telegraph, London, 21 January 2016 The chief executive of beleaguered education giant Pearson branded the company’s doubters “ignorant” and “naïve” as he announced 4,000 job cuts in its second major round of restructuring in three years. Pearson said it would make one in 10 staff redundant in an effort to boost profitability that has been hit by a prolonged downturn in its key US businesses. Pearson employs 4,500 in the UK, suggesting 450 could go from its domestic operations. It came alongside a trading update that revealed the latest in a string of forecast downgrades. Pearson's Share Price, 2015-2016.jpg Full-year earnings per share could now come in at 69p, less than the minimum of 70p Pearson previously forecast, which itself was a downgrade from a minimum of 75p. The figure for next year, not including the bill for job cuts, is expected to be 50p to 55p, with tough conditions in the US likely to persist. The restructure, which will involve warehouse closures and efforts to simplify Pearson’s convoluted back office, will cost the company £320m in the next year. John Fallon, chief executive, said the cuts would produce cost savings of £350m by the end of 2017 and make the company leaner. Despite his previous attempt to overhaul Pearson in 2013 and 2014 by slashing 5,000 jobs, it still has the highest administrative costs of any FTSE 100 company, he added. Mr Fallon swung the axe again under pressure from the City. Pearson shares have lost more than half their value in the last 10 months as doubts grew over his claims that poor trading was a result of the economic cycle. Investors fear that the company’s decision to focus entirely on education may have been a mistake as students increasingly turn to free and cheap online resources. Mr Fallon admitted he had underestimated the impact that high US employment would have in lowering college enrolment and so Pearson profitability. But he angrily rejected suggestions that Pearson was threatened by the increasing role of digital technology in teaching and testing. Battered like CDs? Any attempt to draw an analogy between the market for education materials today and the music market in the early 2000s as the internet and iPods began to batter CD sales was “naïve and ignorant”. He added: “What I think is completely overblown, frankly, is the comparison between education and the music industry. What happened there was people started downloading individual songs and unbundling albums. “That can’t happen with university courses and testing. Open education resources have a role to play; a Harvard professor giving a free lecture online is great, but it is not the same as what happened in the music market. “What others might call a structural shift we would call responding to customers. "There is a big structural shift and that provides Pearson with its biggest opportunity. The changes we are making pre-empt and get ahead of that.” Pearson shares leapt 15pc on news of the restructure and that the company will set its second-half dividend at 34p, flat year on year. It represents the first time in 23 years that the company has failed to increase the payout but many in the City had feared worse. Mr Fallon and Pearson’s chief financial officer Coram Williams said they had conducted an in-depth review and were confident in the assumptions on which their forecasts were now based. Operating profit will rebound to more than £800m in 2018, they said, after diving as low as £260m in 2016. Comments Moiaussi, 21 January 2015: Evolve or die! david s, 21 January 2015: Since Marjorie Scardino departed the whole business model has collapsed and they seem to have lost direction. Cutting staff will just make things even worst not fix the basic problems with the company. Share holders are not getting a good deal with this and a small rise today will just be swallowed by the steady decline in the share price. Paul Browne, 21 January 2015: The slow destruction of the corporate master-state created by Labour rumbles on. Patrick Masson, 21 January 2015: “...comparison between education and the music industry...downloading individual songs [lessons, learning activity, readings] and unbundling albums [courses, learning objects, texts]. That can’t happen with university courses and testing." As a university professor at U Albany, this is happening (happened). I only use open educational resources. My primary texts for my course are, "Producing Open Source Software: How to Run a Successful Free Software Project," by Karl Fogel, "Open Sources: Voices from the Open Source Revolution," by various authors, and Eric Raymond's "The Cathedral and the Bazaar." Mr. Fallon is correct that traditionally published resources like those available through, textbooks, lecture slides/notes, quiz banks, etc. cannot be unbundled from a course pack (think of a course pack as the album and class notes as a single song in the music industry analogy) as each of those components is still owned by the publisher with a restrictive license. However this isn't the analogous model which will disrupt the publishing industry within education. My course highlights what is and will disrupt the publishing model, and is more akin to what the newspaper/magazine publishers went through with the rise in blogging and "citizen reporting." The content used in my course is freely available, and may be downloaded in whole or in part, edited, remixed, etc. Individual lessons, learning activities, readings can be unbundled from their original source and from other accompanying resources (lecture notes contributed by others, learning activities/exercises, test/test questions, etc.), or used individually, separately from the resources of a course (the "album"). Maybe Mr. Fallon does not see the threat, because he is looking in the wrong direction? mrs_trellis to Patrick Masson, 21 January 2015: I agree with you completely. Fallon has made a huge strategic blunder. He should have hung on to the good quality publishing businesses that Pearson owned and treated the education sector with caution, in part because it is a power play by politicians and in part because there are some very fine minds in higher education and elsewhere who will be able to move more easily to the opportunities than a big multinational can. Richard Knights to Patrick Masson, 22 January 2015: Yes exactly. I used to work for Pearson on the digital side and a few of us spent many years trying to highlight this challenge. But no one could see it, It's like a blind spot. The arguments given was that only a few teachers would do this while the majority would buy pre-packaged materials like good sheep. Thinking in simplistic 'itunes' disruption just highlights how little Fallon understands about the challenge of the new emergent ecosystem. Oh and another thing, the senior leadership team regarded innovation as a bad thing. Quote: "There's too much innovation going on" Tom, 26 January 2016: Interesting. This is not about digital innovation as much as a change in the marketplace, Schools are under fierce competition for students, so they have to attract them through different means and products. Throw the backlash of alternative digital products being made available on top of it and you a recipe for problems for Pearson. How Mr. Fallon and his team seems to have misjudged the marketplace alludes me. The Bankers seem nervous. The reaction to cut a total of 9000 jobs seems shortsighted since the U.S. economy will slow in the near term and Pearson sales will eventually rebound. So they will need those folks they are cutting to grow. Doctor Bombay, 31 January 2016: Why does John Fallon still have a job? From: http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/m edia/12111830/Pearson-issues-profit-warning-and-announces-4000-job-cuts.html -- -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. 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