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Stock Market Week: No news is bad news for Pearson unless Scardino seizes golden chance

Marjorie Scardino, Pearson's Texan chief executive, has a golden opportunity to explain her grand plan today. As she unveils virtually flat pre-tax profits, investors will have their ears and eyes peeled for any hint of Ms Scardino's vision of Pearson's future.

The City's growing impatience with the lack of news from the media conglomerate has affected the share price. The stock soared on Ms Scardino's arrival in January and, for a three-month honeymoon period, remained at a reasonable level, but is now hovering within a few pence of its year low of 664.5p, a long way off its 791p high in the spring.

Analysts estimate pre-tax profits of pounds 43m-pounds 48m, a fairly modest increase on last year's pounds 39.8m, because of the cost of launching Channel 5 and an exceptional credit in 1996.

The figures are unlikely to excite the City unless accompanied by news of sweeping and swift changes. But Ms Scardino insisted at her maiden set of financial results in March that she would not be bullied into announcing radical restructuring and disposals.

She may, however, make a concession by giving details of the sale of the medical publishing division. Pearson Professional confirmed in an internal memo that the future of the subsidiary was under review. Wolters Kluwer has made its interest known, but Pearson will want to ensure it realises up to pounds 100m from the sale.

The real problem is that, even if Ms Scardino can be persuaded to talk about the medical disposal, it is relatively small beer as is the promised divestment of the indirect stake in BSkyB.

What the market really wants is to see Madame Tussaud, the waxworks tourist attraction, or Pearson's 50 per cent stake in Lazard Brothers, the merchant bank, put on the block. Ms Scardino has hinted in the past that she will not sell Pearson's television interests, indicating that the company will in future focus on specialist financial information products rather than mass consumer markets.

There is mounting speculation that, as a result, Greg Dyke, who heads up Pearson's television operations, will tender his resignation shortly.

The results are to be presented at the swish new offices of Pearson Television, which in itself could prove contentious. The refurbishment of the offices, in Stephen Street, went vastly over budget, costing almost pounds 40m instead of pounds 15m as originally planned. Cynics are muttering darkly that the excess harks back to the days of "old Pearson".

The mutterers can hold out a little longer, say analysts, especially as Ms Scardino has had to deal with the unwanted and costly effects of the unauthorised discounting scheme at Penguin, which reared its ugly head shortly after Ms Scardino joined, and forced the company to write off pounds 100m.

That aside, followers of Pearson remain convinced that so long as it underperforms it remains a takeover target. So if Ms Scardino fails to extract the group's hidden value, someone else will.

The other heavyweight media stock reporting this week is Reed Elsevier. It's another case where, for analysts at least, no news is not necessarily good news. City folk would like to hear of Reed's progress in its bid for Knight Ridder Information. Some are hoping that Reed might tie up with Microsoft, with which it formed a strategic alliance earlier this year, to bid for the online data company.

Others would like news of when Reed is going to sell its consumer books division, and whether the company hasstopped the rot in the travel information division. There are also hopes of clues on Reed's future acquisition strategy. Analysts believe Reed may buy various specialist business publications from Reuters.

News of this sort is probably not going to be immediately forthcoming.

More likely is some kind of progress report on Reed's recent acquisitions such as the trade magazines outfit, Chilton Business Group, and MDL Information Systems, a supplier of scientific information management systems.

One thing investors can bank on is a thorough report on the mischief created by the strength of sterling.

Reed warned in April that the strong pound would have a "significant impact" on profits. Forecasts for pre-tax profit range from pounds 411m to pounds 445m, against last year's pounds 418m. Apart from the two media big boys, a bevy of banks are due to unveil interim profits. Market-makers will be watching closely to make sure that the financial sector, which has for some weeks been leading Footsie higher, is living up to the market's high expectations. The possibility of a fourth interest rate rise on Thursday will cast a shadow, though.

First off the block, today is HSBC Holdings, which is expected to reveal pre-tax profits between pounds 2320m and pounds 2525m, compared with pounds 2291m in 1996. Market forecasts for NatWest, which reports tomorrow, range from pounds 757m to pounds 770m, against pounds 302m last year.

Profits of between pounds 210m and pounds 215m seem likely at Woolwich, up on pounds 187m the year before. Rounding off the week, Barclays is gearing up for pre- tax profits of pounds 1.21bn-pounds 1.33bn, after last year's pounds 1.29bn.

Joining the banks on Thursday is Rank Group, expected to report lacklustre interim profits of between pounds 90m and pounds 92m, compared to pounds 99m this time last year.

Rank warned in April that an absence of big releases for the home and sell-through video markets had cut profits. In addition, the group is likely to tell of a difficult year for the Hard Rock Cafe. The market is, however, hopeful of the announcement of plans for a share buy-back.

Also on the cards for next week is Zeneca, which is pencilled in for pre-tax profits of between pounds 640m and pounds 670m, by contrast with pounds 611m a year earlier. Meanwhile, the market anticipates pre-tax operating profit of between pounds 425m and pounds 468m from Prudential, against pounds 421m last time. Commercial Union is likely to report pre-tax operating profit of pounds 215m to pounds 235m against pounds 216m last year.