Last updated: March 2, 2010 7:43 pm

Pearson chief outlines broadening ambitions

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After 13 years running Pearson, Dame Marjorie Scardino counts as one of the UK’s longest-serving chief executives.

Yet she sounds surprised when told that some investors had thought she might have used Monday’s full-year results to retire on a high.

“They really think this is the highest we can get? How disappointing,” she says, joking that she is waiting for the share price to hit £50. (It rose almost 5 per cent on Monday, to 956p.)

But she is serious about wanting to stay, after a year in which the group behind eCollege distance learning programmes, Penguin Classic and the Financial Times found headline profit growth of 13 per cent.

Much of the focus of Monday’s results, and the cause for upgrades to analysts’ forecasts through the year, was Pearson’s market share gains in its core North American education business, where it has diversified from text books to assessment programmes to personalised digital software for students.

Yet Dame Marjorie is keen to push further into digital learning and to cast Pearson’s net wider, to expand its emerging markets operations, build areas such as vocational and professional training and explore a consumer education market where it will be less dependent on government funding.

Such tactics would open larger markets and put Pearson alongside a broader group of for-profit school operators and professional training firms around the world.

It is building for-profit schools in Kenya, where parents can fund their daughters’ education with micropayments over their mobile phones, while in California, Penguin’s chief executive has been pitching video versions of its Dorling Kindersley reference books for Apple’s iPad device.

Rapid digital changes in Pearson’s markets favour companies able to invest over time, Dame Marjorie argues, echoing analysts such as Claudio Aspesi of Bernstein Research, who wrote on Tuesday that Pearson’s investment in technology had coincided with capital constraints at rivals to give it “a unique opportunity to transform itself into the juggernaut of global education”.

Her plans are likely to require investment and analysts are looking to Interactive Data Corp to provide it.

The financial information company, of which Pearson owns 61 per cent, has started a strategic review that has attracted numerous early bidders.

Analysts estimate that should IDC sell, it could yield £900m to £1.4bn ($1.3bn to $2.1bn) after tax for Pearson.

Dame Marjorie will not comment on the process, but indicates she would not be short of places to reinvest such a sum.

She says: “We have a lot of ideas, and a pretty good idea about how we would fund them.

“There will be no gigantic acquisition that would be so life-changing we’d have to gear up to do it,”.

Dame Marjorie, 63, says that Pearson’s broadening ambitions – and the fact that “we are doing things that I think are important” – are keeping her at Pearson for now.

She says: “It is such a different company now than it was even five years ago. We had a good strategy but we’ve been able to keep on changing it. Given that a few of them are my ideas, I’m sticking around to make sure that they get done.”

The board has succession plans for Pearson’s 100 top executives, herself included. But she adds: “It is a different world that we live in, where people don’t retire when they are 63.”

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