"Is education publisher LSE:PSON:Pearson on the path to recovery, or will this week's 9.5% rise prove to be a false dawn?Ignoring all that had happened prior to 2017, which included multiple profits warnings, the stock was languishing at 634p this ..."
It looks to my admittedly untrained eye, they are bleeding a ton of cash on borrowings (financing activities), as well as bleeding cash on their core business, having started the year with 1.4bn and ending with (insert figure here - I suspect around 650ml, with the core business, over the Christmas period, overall producing another say 500-600ml (last year 700ml more or less). And they are planning to buyback 300ml ? I'd pay off some of my borrowings which costs are destroying my cash flow.
"Liberum predicts another profit warning at Pearson
Liberum is expecting another profit warning from educational publisher Pearson (PSON) this year after chief financial officer Coram Williams cautious tone over full-year guidance.
Analyst Ian Whittaker reiterated his sell recommendation and target price of 330p on the stock, which fell 3% on Friday after Williams appearance at an industry conference. At the time of writing, the shares were flat at 568p.
The key cause [of Fridays share price fall] looks to be [Williams] comments which suggested there was some uncertainty around the full-year guidance, going into the key selling and returns season in US higher education space, which is the single biggest driver of Pearsons profitability, said Whittaker.
We expect another profit warning this year and, with Pearson already having announced another major restructuring programme, there seems little scope to cut costs further to maintain guidance. "
Games, I know it is difficult for Leavers to face reality, but the facts speak for themselves. Brexit is already damaging the UK. Despite a weak £ sterling, our exports were sluggish and our imports ballooned. The Office of National Statistics report that in May/June our trade deficit increased by £4.6 billion and that in the last nine months to June (2017) our trade deficit hit al all time record. It should be obvious that we cannot go on for ever running up deficits.
Leavers always cling on to the myth that 'they need us more than we need them'. Well, Germany consistently runs up a huge surplus and can survive for years not doing so well. We cannot; as a country we are effectively bankrupt. We were in 1945 and the Labour government got us out of the mess. it well happen again as Brexit will kill off the Tories. Michael Heseltine knows this (see today's Times). The Brexiteers are like blind men leading the blind.
No number I'm not -- The EU is a living breathing economic disaster zone.
The faster it's broken the better for all as it's an unequal mess that has destroyed the livilihoods of half of the people in it's weaker states(countries).
Anyone who can't see that is really living in a dreamland.
80% of the world sells to the EU and 80% of the world doesn't pay into the EU's largesse or accept any kind of foreign intervention or free flow of people except where that individual country decides they want it.
That's the "ONLY" position that the UK needs to be in for the next 100 years.
The EU is a quasi dictatorship and it has to collapse -- whether Brexit is the catalyst is open for question but it's certainly the most important thing that has to happen for the UK for the long term.
"EU if the EU decides to hold firm and deny us free trade."
Your kidding me aren't you?
I thought you were a tough guy. The German's are wringing their hands at the moment and Merkel will be so far kicked down the road if a deal isn't done because half the German car workers will be the one's systematically kicking her axs as she rolls over the cobbles.
20% of Germany's EU exports are into the UK -- they need us more than we need them.
Besides they are already shxxting themselves at what's happening on the UK roads already. Don't know if you've noticed but joe public has woken up to the fact that BMW, Mercedes and Audi have a lowly position on the reliability listing.
It's not gone unnoticed that Kia's 7 year warranty has done serious damage in the last 3 years. That little Sportage package is everywhere you look.
If anything the EU is really really worried that when the UK makes a success of Brexit (assuming we have people with the bxlls to carry it off firmly) they will have a lot of nervousnous about the crumbling southern states who's debt's are over the eyeball level to a greater extent than any time in history.
Without serious trade with the UK -- the EU is in self damage mode.
Games, you are living in a dream world. The basic (and only) argument put by 'leavers' is that 'they need us more than we need them'. Well, the reality is that this argument is a certain non-runner, because if the EU agreed to trade with us on our terms it would destroy itself.
So, the EU will not give in (as I have said because they have no other choice) so Brexit will cause a major recession throughout Europe, where we will be the major loser.
The sad thing is that because of our abdication, Germany will become the dominant force in Europe; they have, in effect, won the war. In the past we have relied upon the USA to bale us out, believing (head in sand!) that there is a special relationship, but when it comes to it the USA always does what benefits it. in the Second World War, the USA leased its second hand equipment to us at great cost (no special relationship, just a commercial deal that shafted us). We were very lucky that the Japanese foolishly bombed Pearl Harbour in Hawaii.
So, when the choice is a trade deal with Europe or with the U.K., Trump has told us - EU is the winner! Brexit will be a disaster, but at least it will kill off the Tory Party, Trouble is that it will kill off Labour as well unless that Party can knock some sense into Corbyn.
Not as much as the UK needs to trade with the EU, m8! There is no way on God's green earth that any trade deal with the likes of Oz or Canada or Ubangi Shari is gonnae make up for the effect of the cut in trade with the EU if the EU decides to hold firm and deny us free trade.
I started off as a Remainer then, when the vote went agin me, I became an "OK, let's get on with Brexit and do the best deal we can" merchant. Now I'm seriously considerin' switching back to being a Remainer and praying that Brexit can be halted.
I was pretty rocked back by the politician (who was it?) who said that David Davis is "as thick as mince, as lazy as a toad, and as vain as summat that I've now forgotten".
If that's true (fingers crossed it ain't!) then God help us.
"We cannot win against the combined weight of 27 European countries."
Number -- we don't have to. The EU countries need to trade with the UK, it's their top 3 market pointing from any position amongst the 27.
Remember -- 80% of the world is not in the EU.
The strength of the Euro is killing the southern economies in the EU and Germany knows this now. It's alright having a strong currency, but when your exports shrink, there has to be a balance or trade stifles -- there is no way on this earth that the economies of Spain, Italy, Portugal can live with this current system.
Remember, the founder of the EU has already admitted it was a big mistake, because you can not support a common currency without common fiscal policies and common debt relief, something the Germans will "NEVER" agree to.
That's why it's already dead and that's why the overall EU's share of world trade declines every single year since it's inception.
The sorry sad tale is that the political will of non business people will hold this protectionism together rather longer than the economies can sustain it, because they have a huge financial vested and personal interest in it and the costs of supporting the system have ballooned because of corruption and theft of the countries tax money..
If the EU is dead, why is the so strong and the £ so weak? Sorry Games, the U.K. will be the loser. From 1937 to 1945 a much stronger (than the UK) Germany look on Europe and lost. We cannot win against the combined weight of 27 European countries.
As Vince Cable says, the old duffers still living in the 1960's (in those days we had a lot of industry and owned lots of assets, before Margaret Thatcher destroyed them all) have shafted the youth of today. At least I can hold my head up high and tell them that I was not one of the brainless old duffers,
number - wonderful summary m8, at least up to the point 17.
After 17, it's all fantasy and in all likelihood the complete opposite will occur.
Not for Pearson mind, they will keep declining until they appoint someone with a brain to run it.
Unlikely in the sense that the vast majority on the closed loop pay and appointments body are living dead and will just keep milking the FTSE100 system.
As for the EU -- it's already dead.
the UK? -- It has a chance if it shxxts half the negative remainers and the rest of the politicians grow a pair and get on with the job.
Since Fallon became CEO, 10,000 (yes, ten thousand) jobs will have been axed, once the latest round of redundancies (3,000) are complete. The strategy is consistent:
(1) Invest in declining growth businesses.
(2) Banks point out that the company is leaking cash
(3) Sell viable business to reduce debt.
(4) Having come down from sale, debt goes back up again.
(5) Reassure City that everything is OK. Initiate round of redundancies.
(6) Debt increases again because of redundancies - banks unhappy.
(7) Sell another business to reduce debt.
(8) Repeat (4) to (7)
(9) invest more in failing business
(10) Slash dividend
(11) Hope shareholders won't notice proposed bonuses for directors.
(12) Shareholders do notice, axe more jobs
(13) Note that 25% of workforce now been axed.
(14) Maintain strategy of reducing size of business.
(15) Hold board meeting to discover why debt is still increasing
(16) Appoint consultants to work out what has gone wrong.
(17) Consultants report they have sold viable and growing businesses and invested in duff ones.
(18) The US conclude a trade deal with the EU, which means that all European trade with the US must have an EU licence. Pearson's US business is dead,
(19) The banks call in administrators and the business is wound up.
(20) Outgoing CEO says his strategy was perfect, but Brexit has ruined the business, We are now in the late summer of 2020.
(21) Fruit prices in the UK increase by a factor of ten as a ever declining pound forces import costs up and there is no one available to pick British produced fruit.
(22) The NHS cannot function because foreign nurses cannot get a visa and British born people cannot afford the training costs compared to the poor salaries on offer.
(23) MP's award themselves a 15% increase, while telling public sector workers they must accept a 15% cut.
(24) The National Debt hits £3 trillion.
(25) FTSE 100 falls below 4,000 as businesses fail and unemployment is trebled.
(26) All benefits are scrapped and the workhouse is re-introduced
(27) England, Scotland and Wales are in a deep recession, but Northern Ireland is booming having joined the Irish Republic and regained European citizenship.
2022 arrives and the new Labour government (not led by Corbyn) begs the EU to let us back in. France says non.
2025 France relents and we rejoin the EU. As a condition of re-entry the House of Cimmons and House of Lords are scrapped. Regional parliaments are set up in London, Cardiff and Glasgow. There is no national government, but we have 12 seats in the EU parliament in Berlin.
2040. The Bank of England calculates that the vote to leave the EU cost the country £5 trillion.
Education publisher Pearson said it was slashing its interim dividend by 72% as it kicked off a restructuring programme that will involve cutting 3,000 jobs. Underlying sales edged up to £2bn from £1.9bn, while adjusted operating profit came in at £107m compared to £15m in the first half of 2016, reflecting savings from the 2016 restructuring programme, a benefit from phasing and the strength of the US dollar versus the pound, offset by cost inflation and other operational factors. The company cut its dividend per share to 5p from 18p.
"After Lloyds' second-quarter update this week, Royal Bank of Scotland follows Friday, with Pearson following on a busy end to the first few days of August.Monday 31 JulyTrading StatementsKeller, Fidessa, Arix Bioscience, Senior, Coats, ..."
I suggested selling this share at 745p, pointing out that they were selling profitable businesses to prop up their miserable on-line publishing business. I would still sell at 623p as debt will increase again (after reducing because of the sale) when they invest heavily in something with no future. Eventually, they will have nothing on value left to sell and the banks will call the debt in. The end is less than three years away.
What amazes me is that what has been going on has been known for months, yet it seems 'analysts' have only just worked it out!
"It's [sic, recte Its] online edumacation system isn't going to hack it like the hard material position it once commanded."
Y'know, m8, Pearson is beginning to resemble another munter from yesteryear ... I'm talking about the "boxed set of The Last of the Summer Wine wonder" that was HMV. It stuck to flogging T shirts of Justin Beaver and Betamax tapes long after the world had gone digital. And paid the price.
It looks as if Mr Market isn't that impressed by Fallon's latest initiative and fears that the wonga from Penguin will go up in smoke.
Fallon? Fall on sword more like, as someone far cleverer than I observed some time ago.
LKH on the flybridge Jonathan Guthrie will be pleased
Ox - I wouldn't worry your heed about it m8 -- sooner or later there will be precious little depth to need to know much about.
It's online edumacation system isn't going to hack it like the hard material position it once commanded. One would think it would, with the potential for lower costs and all that, but like the music industry this is getting hammered.
The open source activities are pretty serious and it's taking all the margin out of the business.
Could be wildly wrong, but I'd not bet against myself at this time.
"""Publishing house Pearson said it was selling a 22% stake in Penguin Random House to Bertelsmann and recapitalising the business, generating total net proceeds of about $1bn (£776m) with £300m ($386m) being returned to shareholders."""
Won't be much else left to sell soon. Just the diluted online education services left I believe.
Today's FT contains a considerable expansion of the number of companies listed on the main market share service page. Within my own shrunken wad, Johnson Matthey, Diageo, AstraZeneca, SSE yadda yadda (to name but a few) are making a welcome reappearance and are thereby enabling a quick intrasectoral comparison of the basic valuation ratios to be made by those who still find mental arithmetic a useful attribute.
The gradual hollowing out of the share service page was part of the reason I dumped all my Pearson shares while Pearson still owned the FT. The big bonobos clearly were not paying any attention to this (admittedly small) stream of income.
I remain disappointed that Pearson sold the FT. The quality of the rump of Pearson's earnings seems to be declining so there is no chance that I will buy their shares again any time soon.
Hardboy, a visit to Pearson's recent history reveals it sells valuable assets to reduce its debts, then debt goes back up again because it is left with the dross. If it had kept the Financial Times and had no plans to sell Pengiun, but instead had sold its poor performing US education business then it would be riding high,
We are told that senior directors have bought shares with the post tax bonuses they received, allegedly confirming confidence in the business in the process. I apologise for being cynical, but if they re-mortgage their homes and buy up more shares then I might believe them.
I would not buy this share with my own money, but if some kind poster on this BB is happy to donate £1.000 (cheque payable to Numberbiter, please) then I would be happy to buy Peasrson shares with this money, I would, after all, end up with approx £250 for nothing,
The markets are ... irrational and there is no way any one can guess the direction. For example you could be taking money out of one-legged PSON to invest onto some other better performing stock, only to find it going down today, while your now abandoned PSON is 12% up on the day and a 5% dividend to boot !!
If you read the latest statement issued today, you will realise that there is no justification for today's price hike to 745p. Despite a good first quarter and improved working capital control (something you cannot keep on doing!) net debt remained solid at £1.1 billion. The statement then reads that quarter 2 will not be good, although this is balanced by the comment that the best quarter is always the 3rd quarter, being the start of the new academic year, But sales in the second half are based on hope rather than knowledge.
The biggest worry for this share is the huge amount of debt and how it stubbornly refuses to come down. Today's price hike offers an amazing selling opportunity.
"Troubled education company LSE:PSON:Pearson is on a diet, aiming to become "leaner" and more focused. The former publisher of the Financial Times has had a dreadful couple of years, slipping from a peak of over Â£15 in March 2015 to 550p last ..."
I first recommended selling these shares in December 2016 when the price was 788p. Today they are 624p, so even with the dividend it was not worth holding.
Unfortunately, it can only get worse. All the decent businesses have been sold off and all the money has been poured the failing US education business Expect more profit warnings and the banks getting nervous. I don't expect this company will be in existence in 2020.
"Pearson shares were downgraded by Exane BNP Paribas after an "unwarranted" rebound in the face of fresh concerns over the group's ability to return to growth in North America this decade.
Exane, which downgraded Pearson to 'underperform' and cut its target to 550p from 600p, said it was increasingly sceptical about North America in light of new concerns about the sustainability of double-digit growth in the US virtual schools business, the London-listed group's fastest growing segment in the continent, accounting for roughly 6% of group revenues.
The bank's analysis of the penetration of Open Educational Resources in US schools free online learning materials that have put a big dent in its business suggested a "rising risk" to US school courseware revenues, which are about 9% of group sales, with more than one million K12 students now in schools which are in the process of implementing an OER policy.
Moroever, online language learning platforms "are gaining share against traditional language schools and English courseware businesses, which does not bode well for Pearson's English revenue growth".
Exane analysts Sami Kassab and William Packer cut their 2018 estimates for adjusted earnings per share by 5% to 45.7p and 2019 EPS by 7% to 45.6p, so they now stand at the low end of guidance for the current year and 5% below consensus EPS for 2018.
Pearson shares, which also went ex-dividend on Thursday, fell 4% to 622p by 1100 BST."
""""the company's net debt has spiralled from £0.5 billion, to a staggering £1.027 billion.""""
"""The US education market has cottoned on that there is a strong movement to open source education material and it's being standardised and aproved by the US education system. For open source, read virtually free"""
""" Fallon is still the CEO and the corrupt compensation committee have given him a 44% pay rise"""
""" The fools have sold the better parts of their business that were highly prestigious and despite the huge sale values, are still growing debt faster than you can count the derivatives of pi.
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