I’m concerned McGraw is going to be consumed by Cengage. We have been stealing business from Cengage for years and Cengage always seems to be restructuring and trying new thing unsuccessfully.
Maybe time to go back to Pearson?
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Hansen was selected as CEO bc MHE had a weak CEO at the time. He can’t hold a candle to Simon Allen. If Hansen brings in his team they’ll run this 100+ year old company into the ground. They aren’t truthful about anything and probably lie about their earnings.
Hansen's not going anywhere. He'll be the CEO of the new McCengage. Not because he's uniquely qualified or even competent, but because he is private equity's point man. He knows how to spin their BS and swing the axe when he needs to, which is all private equity cares about. They want to slap this merger together and get out as soon as they can. Hansen will be in and out the door just as soon as he can cash his 8-figure merger bonus. The rest of us will be holding the bag.
Inclusive Access is our CU. I’ve taken a lot of my best business and moved it to IA just to please management even though it brings in less revenue.
It’s not time to go back to Pearson - they’ve been on a downward spiral too. Maybe time to leave the industry.
If anything, I'd say it's more likely for Cengage to be the consumee, rather than the consumer...
The next Cengage earnings call is due in a couple of weeks and it is going to be a doozy.
Leadership will be able to point to this massive downsizing as adept and responsive leadership in the face of sudden crisis, but what will remain unsaid, of course, is that the "sudden crisis" is one of their very own making.
Anyone who thought of the basic math behind an offering like CU could see that this was a massive gamble at best and a foolhardy "hail-mary" move at worst. Was there no CFO in place able to serve as the voice of wisdom when this idea was first floated?
The entire story of CU was summed up on one Bookstore shelf last spring. There, one saw a typical stack of Principles of Financial Accounting bundles priced at something like $267.00 each. Just below the stack was a shelf-talking announcing "This bundle can be yours for only $119.00 through Cengage Unlimited - inquire at front desk!"
In interviews promoting the Unlimited scheme, CEO Michael Hanson painted a magical picture of a Chemistry Department Chair phoning over to his English counterpart and suggesting "Hey, our Chemistry kids are saving lots of money over here with this Cengage thing, why don't you guys adopt Cengage so they can save even more???" Industry readers had to be asking themselves, "has this man ever been on a college campus?"
The entire endeavor was just so far removed from the way that decisions are actually made in the Higher Education space, it left one flabbergasted that anyone internally ever thought this to be a winning idea! Of course, this was the same company/CEO informing college faculty that they were about to "transition to digital" and, when college faculty politely decline, changed its entire marketing strategy to be "we're in this for the students!" Have you perused your own Twitter account, Cengage marketers? The students hate Cengage and its Mindtap as much as they hate Pearson and their Revel!
It will not be at all unsurprising to learn that Mr. Hanson is relieved of his duty before 2020 kicks in. This has been a blunder of monumental proportions, and unfortunately close to a thousand more Cengage employees are going to pay the price via their lost livelihoods.
CU was unsuccessful because it canabalized existing revenue and did not add new takeaways so they essentially converted a $110.00 activation to a $55.00 activation if the student were taking two Cengage courses per semester with CU. So, they bled the company dry, burned through cash reserves and have to lay off 25% just to get through the quarter, unexpectedly. Layoffs are not supposed to happen until the merger to compensate for redundancies. This layoff is very different, it's in place just to survive. Why McGraw thinks Hansen should be CEO us beyond anyone's imagination at Cengage.
Did that million subscriptions bring in less revenue than the traditional way students access their materials? It brought in much less in my territory.
I don't call a million subscribers to their new Unlimited subscription "unsuccessful". If they were, why would their CEO be taking the reigns of our MH?