LORD STEVENSON is preparing to step down as chairman of Pearson, the FTSE 100 education, media and publishing company.

Pearson, which reports its 2004 results tomorrow, has headhunters working to find a successor to Stevenson, who joined as a non-executive director in 1986 and moved up to the chairman’s office in 1997.

During his eight years as chairman Pearson has changed radically. A diverse group of assets, including Madame Tussauds and Lazard, the investment bank, were sold off, and Pearson has become primarily an education business.

However, doubts persist among some investors about Pearson’s continued ownership of Penguin Books and the Financial Times.

On Friday the group’s share price closed at 652p, compared with 637½p on May 2, 1997 when Stevenson became chairman.

Analysts have speculated that when the management team of Stevenson and Marjorie Scardino, his chief executive, split up, Pearson might consider selling off Penguin. The book publisher is expected to be the subject of a writedown tomorrow after suffering higher-than-anticipated book returns in the US and a supply chain problem in its British business.

There has also been market discussion about the FT, with Scardino vowing that the financial newspaper would be sold only “over my dead body”.

Nevertheless, news of Stevenson’s departure comes as investors are hopeful of a substantial pick-up in Pearson’s core US education business, which accounts for around half of operating profit.

A series of lucrative “adoption” contracts, which are awarded by American states’ education departments, are up for grabs this year.

The education division is now run directly by Scardino.Pearson declined to comment.

Media analysts at Citigroup, which acts as broker to Pearson, forecast that tomorrow’s announcement will reveal a slight fall in revenues, from £4.05 billion to £3.82 billion, largely as a result of the weak dollar.

The investment bank predicts that Pearson’s operating margin, a key indicator of the company’s performance, will have improved during the past year from 12.1% to 12.5%.

Stevenson also serves as the chairman of HBOS, Britain’s fourth-largest banking group, and as a non-executive director of the American company Manpower.

When his departure from Pearson is complete, Stevenson is likely to seek another big public company chairmanship.

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