Investors applauded plans for News Corp (NASDAQ:NWSA), the Murdoch family’s press and publishing company, to exit the digital education business.
Shares were trading as much as 7% higher in New York this morning, as the media behemoth said it would bin a business that contributed to its descent into the red during its last fiscal year, which ended in late June.
The company decided to cease marketing of its specialized Amplify product range, which supplies tablet computers to schools and related educational digital products, while continuing to provide services to existing customers.
News Corp said it had accordingly depreciated the value of Amplify in its accounts, which has resulted in an exceptional charge of US$371 million in the fourth quarter. This was largely responsible for the US$149 million net loss announced Wednesday (against a profit of 237 million the previous year).
Adjusted quarterly earnings per share were still in the ‘black’ by seven cents, when analysts were expecting only five cents on average.
Revenue, while higher, rose less than expected by a modest 1% to US$8.6 billion for the year, but fell 2% to US$2.1 billion for the quarter compared to the same three month period of 2014.
The revenue drop was especially noticeable in the information branch, which covers among others the Dow Jones news agency and such publications as the Wall Street Journal and the New York Post in the USA and The Times and The Sun in the UK.
Revenues there dipped by 7% to US$5.7 billion over the year, and by 10% to US$1.4 billion last quarter, mainly as a result of advertising revenue declining and negative currency effects.
Publishing activities (Harper Collins, Harlequin) did better, with quarterly revenues up 8% to US$390 million and annually climbing from 16% to 1.7 billion.