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Posts Tagged ‘Deutsche Bank’

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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B&N Earnings Preview

Barnes & Noble reports earnings for the fiscal second quarter on Thursday, and Forbes has a preview of what’s on tap. The company expects profit to range between 8 cents and 12 cents per share. The company has said it will incur expenses totaling 3 cents per share in the second and third quarters related to an adjusted store opening and closing schedule. Barnes & Noble expects same-store sales at bookstores to increase in the low- to mid-single digits, reflecting additional volume from HARRY POTTER AND THE DEATHLY HALLOWS.

Deutsche Bank analyst Dave Weiner said brick-and-mortar book industry fundamentals are risky. He agrees that Harry Potter sales were clearly “extraordinary,” but expects gross margin to decline about 1.8 percent due to Harry Potter and other discounting. He maintained his “Hold” rating on the stock in a note to investors Tuesday and lowered his price target by $3 to $37.