Scardino ends era of sweeping changes As Marjorie Scardino announced her plan to leave Pearson she drew attention to the sweeping changes she had made in her 16 years at the helm and acknowledged the task her successor, John Fallon, faces from January 1. "Though we've changed the company beyond recognition from its form in 1997, we are still in the foothills of the climb to make all kinds of learning more accessible and more effective for more people," she said on Wednesday. Under Dame Marjorie, Pearson's sales tripled to nearly £6bn and operating profits rose from £281m to £942m. Pearson shares, down 0.6 per cent to £12.30 on Wednesday, have risen 87 per cent while global media stocks, according to Citi, have fallen 20 per cent. Much of that outperformance has come in the past five years, with earlier periods marked by swings in investor sentiment. Dame Marjorie began with shareholder-pleasing sales of diverse investments including Lazard, the investment bank, Tussauds Group waxworks and the television company behind Baywatch. Those disposals helped fund acquisitions to build Pearson's education business, from under a quarter of revenues to three-quarters today. Within months of leaving the Economist for Pearson "it was easy enough to know where to focus: education and information," the US-born former journalist recalled in an interview with the Financial Times. Pearson's valuation soared in the dotcom boom, but when technology stocks crashed analysts questioned the £1.7bn price Dame Marjorie paid in 2000 for National Computer Systems, a US educational testing company. An advertising recession created other pressures, with the FT losing money from 2002 to 2004. But the FT returned to profit in 2005 and analysts credit NCS with giving Pearson an advantage as digital technology transforms education. "We are sorry to see Marjorie Scardino go," said Claudio Aspesi of Bernstein Research. Analysts said relentless change in education, news and book publishing would pose fresh challenges for Mr Fallon. The former communications head has overseen rapid growth since taking charge of its international education division, where Pearson funded acquisitions from China to Brazil. On Wednesday, Mr Fallon gave no suggestion that he was planning sharp changes in direction. I think we are in good shape. I think the strategy is clear," he said. He added, however: "The scale of the opportunity that presents itself around the world and the changes in our industry require us to execute the strategy with even greater vigour and urgency, and move harder, faster and deeper." Analysts agreed. "Scardino's tenure has been marked by great success in recent years, though Pearson is now in the midst of a difficult investment period that we think will eventually lead it to new heights," said Tim Nollen of Macquarie Securities. Since 2008, Pearson has overcome concerns about pressure on education budgets by gaining market share from rivals. Cengage and Houghton Mifflin Harcourt have been held back by debt and McGraw-Hill is now deciding whether to spin off its education business or sell it to Cengage or a private equity group. A proposed US "common core curriculum" and Apple's digital textbook store have created uncertainty, but Mr Aspesi predicted more education growth and market share gains for Pearson. News of Dame Marjorie's planned departure revived speculation about possible sales of non-education assets like the FT and Penguin, although media bankers said that investor pressure to sell the FT had eased as its profits have risen. Penguin is facing a shrinking bookstore market and fighting the US Department of Justice's allegation that five publishers and Apple colluded on pricing in the fast-growing ebook market. "We didn't do anything wrong," Dame Marjorie said. Mr Fallon refused to rule out selling assets but insisted that the FT and Penguin were "valued and valuable" businesses that "sit very well with the strategy." Glen Moreno, Pearson's chairman, said he was a "huge fan" of the FT, but noted that he had a responsibility to shareholders. "I don't have any biases, prejudices or preconceptions," he added. Mr Fallon noted that Pearson had between £800m and £1bn of cash available to pursue opportunities that fit its digital, services and emerging markets strategy. Asked why she had chosen to hand over now, Dame Marjorie said: "Those opportunities require some long-term choices and some long-term plans."