How Scardino's halo finally slipped

THE GLOSS has worn off City powerwoman Marjorie Scardino after Pearson's latest profits warning. Despite initial scepticism when the glamorous Texan took the helm at Pearson in 1997, Scardino soon had investors eating out of her hand.

The first-ever female chief executive of a FTSE 100 company, she oozed intelligence and charm. She could do no wrong. Five years on, investors are thinking again. Pearson has tumbled more than 65% since its 2000 peak and Scardino has issued her second profits warning in two months. She has 'lost her halo' and analysts, once starry-eyed, realise the 54-year-old is finding life just as tough as her male counterparts.

To be fair, most of the media sector is facing the same problems because of the slump in advertising revenues. This has battered Pearson's Financial Times newspaper, where profits are set to fall 40% this year. Channel Five owner RTL, in which Pearson has a 22% stake, has also suffered. Pearson's Penguin books have been hit by falling demand.

Scardino warned on Tuesday that profits at the group's education business would be £35m lower than expected. Pearson tumbled 40p to 766p as analysts realised that none of its operations would escape unscathed. They now expect group profits before exceptional items will fall to £270m-£290m this year, from £333m in 2000.

Shareholders have had a rollercoaster ride. When Scardino joined, she pledged to double the share price from 666p within five years. In fact, she saw it soar to £23 within two and a half.

Scardino, married with three children, won praise for focusing Pearson's once-sprawling empire on media and education. She quickly sold businesses from banking (Lazards) to waxworks (Madame Tussauds).

Investors who sold near the top will be thanking their lucky stars since the shares are almost back where they started. At their peak, some analysts estimated that up to a quarter of their value was due to the 'Marj factor'.

Analysts still praise her abilities, but question the costly £1.7bn acquisition of education publisher National Computer Systems. Scardino earned £1m last year, but will have to work hard to justify any bonus this time.