Pearson Fails In Testing; Stock Plummets

Education giant
Pearson PLC (ADR)PSO
plummeted nearly 9 percent Friday after missing earnings and revenues estimates in Q2. A major reason for the decline was the drop in testing revenue in the U.S. and the U.K., according to
Seeking Alpha
.

Pearson has lost several U.S. testing contracts and has made it clear it is shifting its strategy away from testing and more toward digital education services, although this strategy has yet to pay off. Pearson has several partnerships with many online colleges including Arizona State University, which was recently named the Most Innovative College in the Country, by U.S. News & World Report, beating out Stanford and MIT.

Related Link: Brean Sees A Clear Roadmap To Growth For TAL Education Group

Since 2014, Pearson had failed to secure many state testing contracts renewals in Florida, California and Texas. CEO John Fallon reaffirmed last year that testing accounted for only accounted for approximately
7 percent
of Pearson's total revenue.

First half revenue from continuing operations declined 7 percent to $2.46 billion. Pearson still maintained its full-year guidance.

"The markets are still quite challenging, we're not going to see a sudden improvement, but we really think that with the growth and simplification plan that we've have in place that we've created a really strong platform," added CEO John Fallon.

At time of writing, Pearson was down 8.92 percent on the day to trade at $11.64.

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Posted In: EarningsNewsEducationGuidanceGeneralArizona State UniversityMITSeeking AlphaStanfordU.S. News & World Report
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