The education publishing giant Pearson (PSO) will cut about 500 jobs in the UK and the remaining 3,500 jobs will affect offices in South America and North America. The company made $850 million last year, but has issued multiple disclaimers of a slowdown this year. The company attributes the lower profit margin to the improving American job market. Young Americans are working rather than going to school and thus not buying textbooks. This same trend is happening in Britain and South Africa, which are two other high-enrollment English-speaking markets.
Pearson’s President John Fallon has double-downed on the company’s education sector. In July of 2015, he sold the Financial Times to a Japanese company and sold its shares of The Economist. All of these shed assets total up to around $2.5 billion. The disposals are designed to save the company money this year and next - an estimated $400 million by their calculations.
Shares jumped 15% after the announcement of its job cuts. It is clear that the London-listed Pearson foresees a future where heavy, print-focused textbooks will not be needed. The company is also rapidly increasing its reach to digital educational testing in areas like Brazil and China.
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