Pearson upbeat despite web costs

Carphone Warehouse has joined forces with the FT

Spending on internet ventures has hit pre-tax profits at publishing giant Pearson, publisher of the Financial Times (FT).

Pearson, which also owns Penguin books, poured £196m into its internet ventures last year.

This hefty investment meant that the group's overall pre-tax profits fell by 17% in 2000 compared to the previous year.

But the company says that the FT Group's internet enterprises are on track to break even by the end of 2002, two years ahead of original expectations.

'Starting to pay off'

Revenue generated from FT.com rose to £42m compared to £7m the previous year, with a number of blue-chip international companies now advertising on the site.

The Pearson group's overall pre-tax profits fell to £333m ($490m) compared to £402m the previous year.

Despite the fall, the profits were still slightly higher than those forecast by analysts.

Pearson's share price rose 0.9% in early morning trade before falling back 71p to £14.90 at mid-day.

Finance director John Mackinson said expenditure on internet ventures would fall in 2001.

The group invested £196m in its internet enterprises during 2000, slightly ahead of market expectations of £190m.

But the increased rate of growth of internet revenues would lead to a decline in investment, Mackinson said.

"Our internet investment is starting to pay off in terms of revenue in a really meaningful way," he said.

He said it was the first time the group's FT internet ventures had contributed meaningfully to incomes.

And - he added - the strong growth in the Financial Times newspaper's circulation would help protect it against the impact of the slowing advertising market.

New mobile venture

Pearson also announced that the Financial Times (FT) is breaking into the mobile phone market through a strategic alliance with UK mobile seller, the Carphone Warehouse.

The joint venture, named 'FT Mobile', will offer business and financial content for WAP phones, as well as selling handsets and offering after-sales services to mobile users.

The joint venture will piggy-back on the BT Cellnet network, which covers almost the whole of the UK.

The initial range of FT branded handsets are to be supplied by Siemens, Nokia and Sony and will go on sale from the spring.

FT business news and market information will be available through the phones.

The Pearson group poured £113m of its internet investment into the FT Group last year.

The rest flowed into its education business, which now accounts for more than 50% of group revenues after last year's acquisition of US education software company, National Computer Systems.