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Posts Tagged ‘Charles Stanley’

Pearson Sales Downgraded

Forbes reports that shares in Pearson Group, parent company of Penguin, plummeted to an early low of 734 pence ($14.60) in London Wednesday morning, after Deutsche Bank downgraded the stock to “Hold” from “Buy,” cutting its price target on the stock to 915 pence ($18.20) from 930 pence ($18.50). By market close, the shares had climbed back up to 753.50 pence ($15.03), a slight gain of 3.50 pence (7 cents), or 0.5%. The reasons for the downgrade hinged on a difficult outlook for both the “attractive” side of Pearson, namely its professional education business, and the “unattractive” publishing arm including Penguin and the Financial Times.

“I think it’s a little bit early to be worried about that,” said Sam Hart, analyst with Charles Stanley. He added that the outlook for the business was “pretty good,” and that Pearson’s $2.5 billion purchase of National Computer Systems in 2000 would help attract schools wishing use online tools as learning aids. According to Numis Securities analyst Richard Hitchcock this was an unfair evaluation. “Our view is we’re positive on Pearson,” he said. Regarding the Financial Times, he added: “You would never underestimate the impact of Murdoch, but it’s not a major profit driver.”

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Retail Slowdown for Tesco?

The Telegraph reveals that Tesco, the UK’s largest retailer, reported a slowdown in sales growth and gave warning that four interest rate rises in less than a year have hit consumer confidence. Group sales at Tesco increased 10pc in the 13 weeks to May 26 – boosted by a strong performance in Asia – but in the UK like-for-like sales growth slowed to 4.7pc, down from 5.8pc in the previous quarter. City analysts had expected Tesco to report a 5.2pc increase in UK like-for-like sales. Shares in the retailer closed down 22 and 1/4 p at 434 and 1/2 p – the largest one-day fall for four years.

“It appears that higher UK interest rates might finally be starting to bite,” said Sam Hart, retail analyst at Charles Stanley. Andrew Higginson, finance director at Tesco, said customers were more cautious, particularly when buying non-food products. “Things have got a bit tougher with the interest rate rises, but we are still outperforming the market,” he said, adding he had no idea why Tesco shares had fallen so sharply. “We are very pleased with the numbers. They are good numbers.”

Pearson to Bid for Dow Jones?

The Telegraph reports that the parent company of Penguin and the Financial Times put in a bid for the Wall Street Journal-owning company late Friday night as “a desperate attempt to scupper the creation of a powerful international rival,” say analysts. “There is some logic to a bid. Pearson wouldn’t want the Wall Street Journal to be rejuvenated by [Newscorp owner Rupert] Murdoch,” said one commentator. “Murdoch has deep pockets, if he’s willing to run it at a loss and expand in Europe and Asia, the FT’s position only becomes harder.”

Paul Bates, analyst at Charles Stanley, said: “Cost synergies are limited because of the regional biases of the two. There will be some story sharing but otherwise it’s limited.” But geographically the two would be a good fit. “They complement each other quite well. The Journal isn’t particularly strong in Europe and likewise the FT, despite pushing for years and trying to make a go of it in America, hasn’t really succeeded.