The Week Ahead: Pearson's US education needs good report

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The Independent Online

The outlook for the US education business is likely to be amongst the key talking points when Pearson, the international media group that publishes the FT, posts interim results this morning.

ING expects the company's thoughts on the subject to be "far and away the most important catalyst" this morning. "Given that the school sales season is just starting, management should be able to give early indications," the broker said, advising investors to keep any concerns in perspective.

"US schools sales are undoubtedly a famine. But in our view expenditure will be deferred rather than lost forever," ING added.

Numis is also taking the long view, saying that Pearson should outperform its peers, some of whom are facing problems elsewhere in their portfolio, while others have high leverage. "We view Pearson's portfolio as resilient rather than immune, and expect the group to echo its recent comments on the directional outlook for its businesses," the broker said.

Today: Wolseley is due to post a trading statement this morning. Investors will be keen to hear from the new chief executive, Ian Meakins, who took over following Chip Hornsby's decision to step down, although Numis warns that it may be too early to expect a proper outline of his plans.

Nonetheless, any signs that he will take a tougher line on underperforming assets arelikely to be taken positively, the broker said, adding that the "need for transformation is still likely to be the key driver of the short-term share price".

Results/Updates: Dialight, National Grid, WSP, Pace, Wolseley and Pearson.

Tomorrow: ARM, the FTSE 250- listed chip designer, is due to publish second-quarter results tomorrow, and while the company is expected to beat earnings estimates, consensus upgrades are unlikely, as forecasts "haven't fully reflected the weakening of the US dollar", according to Panmure Gordon. "Given its later-stage revenue profile, the lack of upgrades mean that the stock is likely to move sideways in the near term after the recent rally, as investors rotate back into the more cyclical semiconductor stocks," the broker said.

BP should post a modest increase in second-quarter net income on Tuesday, according to HSBC, as higher oil prices, the group's US refining bias and its exposure to non-US gas production help offset the impact of weaker trading profits, falling European refining margins and soft US gas prices.

The broker is also looking forward to an update on cost-cutting, saying that the results should "provide further evidence that BP's restructuring programme, initiated in mid-2007, is ahead of schedule and likely to beat its 2009 cost-savings target of $2bn".

Wolfson Microelectronics is due to publish second-quarter numbers. Consensus estimates, based on figures from around 10 analysts, anticipate $31.3m in revenue. "Wolfson has already stated that trading in the second quarter was expected to be in line with expectations," Singer Capital Markets said last week, adding that, with industry destocking having largely run its course and key customers like Samsung, LG and Apple performing well, the group may well beat its estimates.

Also tomorrow, the software group Sage is due to post a third-quarter update, and while the rate of decline in North American revenues should have stabilised, the overall rate is likely to have worsened owing to falling revenues in the later-cycle Main European businesses, according to Numis.

"Following strong cost savings measures announced [in May], we do not expect further cost reduction efforts to be announced with this interim management statement (Sage explicitly said that cost reduction was done for the year), although we still fear that they may be necessary in continental Europe at some point," the broker added.

Results/Updates: Informa, Croda International, Provident Financial, PZ Cussons, Sage, BP, ARM and Wolfson Microelectronics.

Wednesday: Results/Updates: BG, Cadbury, CSR, EasyJet, Halfords, Manganese Bronze, Morgan Crucible, Reckitt Benckiser, Renishaw and St. James's Place.

Thursday: Deutsche Bank is looking forward to a positive update from BAE Systems, the aerospace and defence group which is due to post results later this week. Looking ahead, management should strike a confident tone despite the difficult defence spending outlook, the broker said.

Results/Updates: Antofagasta, AstraZeneca, Brit Insurance, BT, Centrica, Charter, National Express, Laird, Reed Elsevier, Rexam, Rolls Royce and BAE Systems.

Friday: Results/Updates: Anglo American, British Airways, Jardine Lloyd Thompson, Keller, Rank, Rentokil Initial, SABMiller, United Business Media and Vedanta Resources.

Diary: Economics

Monday: Bank of England reverse gilt auction (£2bn: 10-25 year)

Tuesday: Land Registry House Price index for June

CBI Monthly Distributive Trades Survey

Wednesday: BSA Savings & Mortgage Lending Figures

Bank of England lending to individuals

Sectoral breakdown of aggregate M4 & M4 lending

Net consumer credit & lending (on dwellings)

Friday: GfK consumer confidence survey

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