At a Goldman Sachs media conference held earlier this month, Peter Jovanovich, CEO of Pearson Education, said that because of better than expected sales in its college division and its NCS testing and assessment group, total Pearson Education revenues for 2002 should be up by at least 5%. The company had been projecting a sales increase of 3% to 5%. The gains in the college and NCS operations will offset a soft elhi market, where sales have been "a little bit weaker than expected," Jovanovich said.
NCS should do more than $1 billion in business this year, led by government contracts in the training and e-learning fields. The college division has done particularly well with sales to two-year community colleges. Jovanovich said he expects the college division and NCS to have another good year in 2003.
Areas where Pearson Education will be downsizing its investments include Latin America, South Asia and computer books. Jovanovich said Pearson has already implemented cost-cutting measures in its computer book business, including layoffs. He noted that Pearson's computer book operation at one point had sales of more than $400 million, but that revenues fell 20% in 2001 and are expected to fall 10% this year. "We don't see the market coming back," Jovanovich said; revenues in 2003 are expected to be flat at best. The company is cutting its investment in computer books and could exit some small international markets next year, Jovanovich added. Despite the cutbacks, Pearson will still publish about 700 computer books annually.
Jovanovich said prospects for school publishing in 2003 are mixed. While the number of state adoptions will increase sales, growth will be tempered by state funding problems. Federal funding will give a boost to sales in early reading, testing and data reporting, Jovanovich said.
Jovanovich had no comment on whether Pearson might be able to pick up pieces of Vivendi Universal Publishing, although he thought the distractions caused by the divestiture process had benefited Pearson this year and could also help Pearson and its competitors take market share from HM in 2003.
Looking at prospects for all of Pearson Education in 2003, Jovanovich said he is not expecting much growth in revenues, but does expect "meaningful" improvement in operating income.
Jovanovich also made some brief remarks about the Penguin Group, observing that the trade publisher remains on track to deliver revenue growth that will exceed the expected industry growth rate of 3%. Profits will increase by double digits, due mainly to a return to profitability at Dorling Kindersley.
