by Laura Colby | Bloomberg News | http://bloom.bg/1HsQttL
June 26, 2015 — 8:39 AM PDT :: News Corp. is winding down sales of custom-made tablet computers after few schools bought the devices, once central to the company’s goal of overhauling U.S. education, according to two people familiar with the matter.
The media company, whose executive chairman is billionaire Rupert Murdoch, is no longer ordering new tablets from its manufacturer in Asia, though it has stock on hand for existing school customers, according to the people, who declined to be identified because they weren’t authorized to speak publicly.
By the end of this month, New York-based News Corp. will have invested more than $1 billion in Amplify, its education division, which sells a digital curriculum and testing services in addition to the tablets. Few districts have bought the units, which can be used for classroom work, homework assignments and tracking student performance. The head of the tablet business left the company earlier this year.
“We continue to support our tablet customers and are still fulfilling orders for additional tablets,” Amplify said in an-email. The company said it “continues to receive and consider new contract requests” for the tablets.
Greensboro Glitches
The Greensboro, North Carolina, school district placed a $14.6 million order for the tablets. The contract, which included service, is by far the largest one Amplify received. Technical glitches marred their introduction in fall of 2013, and the district canceled the rollout and tried again a year later with a redesigned device, Bloomberg reported in April. Amplify said the feedback from the district had been positive with the revamped tablets.
Amplify said it is still committed to marketing its digital classroom materials to U.S. schools. It has received “several million dollars” of orders in the past 10 weeks for its software-based curriculum, according to the company.
Amplify makes up about 1 percent of the $8.6 billion in annual revenue of News Corp., which also publishes newspapers including the Wall Street Journal and competes with Bloomberg News. School testing, a business News Corp. entered in 2010 with the $360 million purchase of Brooklyn-based Wireless Generation, is the largest part of Amplify’s revenue. The testing business sells software that lets teachers gauge student progress and remediate reading skills. Amplify also markets English, math and science curricula as well as educational games.
News Corp. shares rose 1.9 percent to $15.03 at 12:34 p.m. in New York. They have fallen 4.3 percent this year.
For the year ended June 30, 2014, Amplify reported a $193 million loss on sales of $88 million. The loss narrowed 51 percent, to $69 million in the first nine months of the current fiscal year, compared with a year earlier.
Earlier this month at a London investor conference, News Corp. Chief Executive Officer Robert Thomson said the company’s investment in Amplify would be “significantly lower” over the next year and praised the quality of the company’s curriculum.
Executive Departures
The head of Amplify’s tablet unit, Stephen Smyth, left the company in February. An interim leader is in place as the company, under a program called One Amplify, attempts to integrate its units into a single organization and eliminate duplication, the company said. Smyth didn’t return messages seeking comment.
Smyth wasn’t the only high-level departure at Amplify this year. In June, Christopher Cerf, the head of its testing unit, left the company after slightly more than a year. Cerf previously worked with Amplify CEO Joel Klein in the New York City schools. Klein was chancellor under then Mayor Michael Bloomberg, the majority owner of Bloomberg LP, the parent of Bloomberg News. Cerf was named superintendent of the Newark, New Jersey, public schools starting July 1. He didn’t return messages.
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