Pearson Lost $294M on Web Initiatives

Pearson's Internet operations lost £196 million ($294 million) in 2000 on sales of £45 million, the U.K. company reported in a recent filing with the Securities & Exchange Commission. The company's FT Group, which houses the Financial Times, lost £113 million on sales of £42 million, while Pearson Education had sales of £3 million and losses of £83 million. The company said it expects Pearson Education to account for a higher percentage of losses in the future and that all of its Internet operations are expected to have significant operating losses for the foreseeable future.

Pearson's Penguin Group subsidiary was not affected by Pearson's Internet investments in 2000, although the company said Penguin "is preparing to use the Internet to increase the commercial efficiency of its existing publishing operations." The report also noted that about 5% of Penguin's U.S sales were generated by e-retailers last year. According to the filing, Penguin, which has a backlist of more than 25,000 titles, generates more than 90% of its revenues from book sales, with the balance coming from audiobooks, CD-ROMs, licensing and distribution.

Penguin had a worldwide staff of 4,708 in 2000 compared to 3,229 in 1999, with the gain largely due to the Dorling Kindersley acquisition. In 2000, Penguin's U.S. operations had 2,310 employees, while there were 1,630 employees in the U.K. and 768 in other locations. At Pearson Education, there were 13,585 worldwide employees, with 9,180 in the U.S., 1,517 in the U.K. and 2,888 in other worldwide offices.