In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Pearson is to cut 3,000 jobs as it pushes ahead with a £300m restructuring programme in an attempt to restore investor confidence after a series of profit warnings and record losses last year. Chief Executive John Fallon is taking a temporary 25% pay cut and Chairman Sidney Taurel's pay will be halved.New Chief Financial Officer Sally Johnson will take a 20% pay cut and the board's non-executives will take 25% reductions. The next Pearson plc dividend went ex 23 days ago for 6p and will be paid in 16 days. Paying less in dividends frees up more cash for these initiatives and provides some extra breathing room.Another way to think about the upcoming dividend cut is to look at the magnitude of missed expectations for profitability.Pearson paid about £423 million in dividends in 2015 (and a similar amount in 2016 once financial statements are available). Management seems to have little visibility into the future (2018 operating profit guidance was taken off the table), and such a reduction would bring Pearson’s payout ratio down to a level more in line with its long-term history.However, an even steeper reduction in dividends wouldn’t be a big shock because management plans to invest more heavily in digital operations and strengthen Pearson’s balance sheet. Dividend.com: The #1 Source For Dividend Investing. The payout, up 4% from a year earlier, will be made on 7 May.Pearson's revenue fell 5% in the first quarter as the Covid-19 crisis hit sales.
An equity analyst said Pearson’s decision to cut the dividend was “startling for investors” and that the company’s CEO was “seriously testing investors’ faith,” according to the Financial Times. The company had issued five profit warnings in four years, and Pearson announced it was beginning a restructuring program in January 2016 to reduce costs and better position itself for growth.The restructuring initiative reduced headcount by 10% and generated ongoing annualized cost benefits in excess of £350 million. The company had issued five profit warnings in four years, and it announced it was beginning a restructuring program in January 2016 to reduce costs and better position itself for growth.The restructuring initiative reduced headcount by 10% and generated ongoing annualized cost benefits in excess of 350 million pounds ($426.66 million). Published: 16:55 EDT, 24 April 2020 | … Since tracking the data, companies cutting their dividends had an average Dividend Safety Score below 20 at the time of their dividend reduction announcements.The chart below plots each company’s Dividend Safety Score on the x-axis and the size of its dividend cut on the y-axis. It’s worth nothing that Amazon (AMZN) entered the digital and print textbook rental markets in 2011 and 2012, respectively.The continued rise of textbook rental services and digital learning is disrupting the traditional education courseware industry, denting new book sales and pressuring pricing.Unfortunately Pearson’s massive size is working against it, making it harder for the company to quickly adjust to these disruptive trends.Management is working to shift 75% of its North American courseware business to digital by 2020 (up from 50% today) and is also responding by slashing its e-book prices by 50% to make it more competitive.