Business

Pearson to cut 3,000 jobs worldwide

Graduating students arrive for the Columbia University 2016 Commencement ceremony in New York May 18, 2016. Image copyright Getty Images
Image caption Pearson's book sales to US college students have been falling

Pearson plans to cut 3,000 jobs following a record loss last year for the seller of academic books and online teaching services.

The cuts, which represent 9% of the firm's global workforce, will affect back office operations including human resources, technology and finance.

The job losses are part of £300m cost cutting plan announced in May.

In January, Pearson reported a slump in sales at its main business - selling books to US college students.

That contributed to a loss of £2.5bn in 2016, the biggest loss in the company's history.

Pearson has been hit as students have been switching from text books, which have high profit margins, to cheaper online alternatives.

Adding to that problem, the number of students enrolling at US colleges has been slowing.

Pearson has been trying to build a business in online educational products, but has been struggling to generate profits.

'Strains' on business

Analysts are not convinced that Pearson's fortunes will recover anytime soon.

"We continue to believe that another poor year in US higher education publishing will put strains on the business," analysts at Liberum said in a research note.

"We are sceptical of the view that digital will rise to the rescue with several problems here," they said.

Earlier this month, Pearson sold a 22% stake in Penguin Random House to Germany's Bertelsmann for $1bn (£776m).

The deal left Pearson with a 25% stake in the book publisher.

In 2015, Pearson sold the Financial Times to Japan's Nikkei for £844m.

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