Even Santa Can't Save Pearson (Mis)Education

With apologizes to Clement Moore

'Twas the week before Christmas
Markets in fluster
Pearson's business plan sinking
'Tis naught but bluster.

Its shift to digital sales
Left print media behind
Ain't bringing in the profit
Too late to rewind.

Common Core looks real shaky
U.S. markets way down
High-stakes test regime flounders
Maybe Pearson will leave town.

Pinned hopes on Third World nations
They'd buy Pearson tools
People need much more to live
Than cheap Pearson schools.

So the week before Christmas
No Santa for them
Looks like Pearson is dying
With no hope from heaven.

The stock market collapse could not have happened to a more deserving corporate offender -- the Pearson global octopus with tentacles straddling the world. On October 21, 2015 Bloomberg News reported "Pearson's Stock Slump Dwarfs FT, Economist Sale Proceeds." It called the Pearson stock slump on the London Stock Exchange "the biggest since at least 1988." In just two days, the value of Pearson's stock declined by $3.6 billion.

Pearson's Chief Executive Officer John Fallon always has lots of explanations and excuses. In 2013 he claimed, "Trading conditions are tough and structural changes mean many of our traditional publishing activities are under pressure." At the time Fallon denied plans to sell the Financial Times and argued the company's restricting plans were simply designed to enhance Pearson's "digital education services."

A year later, Fallon blamed cyclical factors and the costs of transitioning to digital for Pearson's economic difficulties, but asserted the company "did make significant progress on a number of fronts in 2013." One of the bright spots for the future, or so Fallon thought, was the "major curriculum change brought about by Common Core" in the United States. It was being "implemented slowly" but it was going to be a Pearson cash cow as testing mandates kicked in. Apparently Fallon and Pearson never anticipated the impact of the opt-out movement on American educational policy and the shift away from single-tract federally mandated tests.

In October 2015 Fallon insisted Pearson "is doing the right things," but David Reynolds, an analyst at Jefferies, described Pearson's business model as "bewilderingly complex" and Chris Collett of Deutsche Bank warned investors "Acquisition targets, multiples and returns are all highly uncertain." Claudio Aspesi, a senior research analyst at Sanford C. Bernstein, argued the plunging stock price was "a signal to management that investors are losing faith in the strategy." The Financial Times, formerly a Pearson property, quoted a large shareholder "The management hasn't got any defence, it really hasn't." Meanwhile the "bleeding" did not stop.

On Friday, December 11, 2015, Pearson closed at 10.80 for a five-day market decline of 7.5% on the New York Stock Exchange, an 8.5% decline for the month of December, and a 40% drop for the year. This followed a negative "earnings growth" report for 2014 of -22.25%. On the London Exchange, Pearson stock continued to do even worse. It lost approximately 15% of its value from November 25 to December 14 and an astounding over 50% from March to December 2015.

CNN's Money website reports that Pearson's revenues have been stagnant since 2012, its cash and short term investments have steadily declined, although the sale of the Financial Times did bring in desperately needed cash reserves. One figure I found both hard to fathom and amazing at the same time is that this multi-national corporate giant seems to have paid negative $800 million in income taxes since 2011.

More potential Pearson disasters are lining up. Pearson's Stanford 10 Achievement Tests that are used by U.S. school districts to assess student learning from kindergarten through high school will be phased out by June 2016. Many states are replacing them with their own standardized exams. In 2010, twenty six states were part of a national consortium that planned on using Pearson testing products to administer Common Core aligned PARCC exams. By August 2015 only seven states were still partnered with PARCC and in December 2015 a bill was introduced in the New Jersey state legislature to drop Pearson's PARCC. With ESSA granting states more testing flexibility Pearson stands to lose even more "partners."

Internationally Pearson is also not doing very well. South Africa sharply cut back on the purchase of Pearson textbooks. In the Philippines, Pearson is under attack for undermining public education. Last summer, in an open letter co-signed by educators from around the world, Mugwena Maluleke, General Secretary of the South African Democratic Teachers Union (SADTU), and a former math teacher and Principal of Tshwane's Rodney Mokoena Junior Secondary School, accused Pearson of "turning its back on free public education for all" in its efforts to "commercialise and privatise education at all levels." According to Maluleke, "Pearson's efforts in the global south to make education a commodity to be bought and sold is a serious threat to democracy and will ultimately increase segregation and marginalisation."

Pearson, which calls itself "the world's largest education company," is in deep financial trouble. Profits are down in the North America market, it divested itself of print properties to raise cash, and its stock prices plummeted this year on the London and New York exchanges. Pearson is trying to recoup in Third World markets, but so far this strategy has not brought about a financial rebound and has led to counter-attacks by global activists. Finnish educator Pasi Sahlberg calls the Global Educational Reform Movement by its initials, GERM. It is a great acronym for a global plague and a very sickly Pearson is its principle carrier.

Even Santa can't help Pearson now, and if he could, I doubt if he would.

With more musical apologies:

Pearson better watch out
It better not cry
Don't even pout
I'm telling you why

Santa ain't coming to your town.

Santa's keeps a list,
He checks it twice;
He knows Pearson's been naughty
It's all about price.

Santa ain't coming to your town.