UPDATE 2-Pearson sharpens outlook; digital services boost H1

* Sees full-year adjusted EPS up 7 percent

* H1 underlying sales up 7 pct to 2.34 billion pounds

* Adjusted operating profit up 79 pct to 178 million pounds

* Interim dividend raised 7 percent to 13 pence

* Shares up 3.3 percent

(Adds details on units, shares, CEO, analyst comments)

By Georgina Prodhan

LONDON, July 26 (BestGrowthStock) – Educational technology provider
and Financial Times owner Pearson (PSON.L: ) firmed up its
full-year outlook after investments in digital services boosted
its first-half results, lifting its shares more than 3 percent.

The British media group said on Monday full-year adjusted
earnings per share should rise to around 70 pence ($1.08), a 7
percent increase over the year-ago period. It had previously
said underlying profit should grow, without being more specific.

“The 2010 finish line isn’t yet in sight, but this is as
good a start to our year as I’ve seen. That boosts our
confidence in the full year, enabling us to brighten our outlook
and raise our guidance,” Chief Executive Marjorie Scardino said.

Shares in Pearson rose 3.3 percent to 1,005 pence by 0849
GMT, the top gainer in the European media index (.SXMP: ), which
rose 0.5 percent.

Pearson, which also owns consumer publisher Penguin Books,
reported that first-half adjusted EPS leapt to 16.6 pence from
7.9 pence in the year-ago period, and underlying sales grew 7
percent to 2.34 billion pounds.

The firm, which makes the vast majority of its sales in the
second half of the year, raised its interim dividend by 7
percent to 13 pence per share.

London brokerage Numis raised its target price to 1,100
pence from 1,038 pence and kept its “add” recommendation.

“We remain firm supporters of Pearson, which is the pick of
the more defensive media stocks,” its analysts wrote in a note.

Pearson’s results excluded financial data provider
Interactive Data (IDC.N: ), whose $3.4 billion sale it expects to
complete in the coming weeks, and whose profits and sales it
reported as discontinued business.

It has already begun reinvesting the proceeds in educational
technology and announced its biggest acquisition in the field
outside North America last week, with an agreement to buy part
of Sistema Educacional Brasileiro (SEBB11.SA: ). [ID:nLDE66L08H]

“All of Pearson is now about education,” Scardino told
journalists on a conference call.

Pearson’s education business, the world’s largest, reported
a 9 percent increase in sales and more than doubled its
operating profit as it gained market share, helped by digital
learning tools especially popular amid spending cuts on books.

McGraw-Hill (MHP.N: ) said last week its textbook sales were
slowing as some U.S. states cut spending [ID:nN22232281]. But
U.S. education provider Apollo Group’s (APOL.O: ) results were
helped by higher university enrolments. [ID:nSGE65T0JR].

Pearson said it remained cautious in the face of severe
pressure on public-sector funding in the United States and
elsewhere, but said it expected to keep gaining market share in
education and to sustain healthy renewal rates at the FT Group.

In the first half, the FT group reported a 7 percent rise in
underlying sales and more than a doubling in its operating
profit as advertising revenues returned to growth. The new FT
application for Apple’s (AAPL.O: ) iPad was downloaded almost a
quarter of a million times.

Penguin Books also saw underlying sales growth of 7 percent,
while underlying profits rose 56 percent, helped by a threefold
rise in sales of electronic books and bestselling titles
including Paul Hoffman’s fantasy novel “The Left Hand of God”.

Stock Market Report

(Editing by Erica Billingham and Lin Noueihed)

UPDATE 2-Pearson sharpens outlook; digital services boost H1