Shares in the former owner of the Financial Times, down more than half since last March, jumped more than 16 percent after it pledged to maintain its dividend, despite forecasting sharp profit falls in 2015 and 2016 before a recovery in 2018.

Chief Executive John Fallon said problems in its markets, such as fewer people in the United States going to college, had been more pronounced and had lasted longer than expected.

"We are taking immediate and decisive action to simplify the company, integrate operations and cut costs, all with the aim of getting Pearson growing again," he told reporters on Thursday, setting out plans for 4,000 job cuts.

The plan could be the last throw of the dice for Fallon, who has issued a series of profit warnings since he took over in 2013, in contrast to the steady growth delivered by his predecessor Marjorie Scardino during her 16 years in charge.

One of Fallon's first moves was reshaping Pearson to try to make it better placed to sell products digitally, which he said at the time would result in an improvement in growth in 2015.

Instead, market problems described as cyclical have stubbornly persisted, and the company has forecast earnings this year of 580 million to 620 million pounds, up to 100 million pounds below market estimates.

Fallon's response is another dose of the same medicine, along with a prognosis of market recovery in another couple of years.

"I am very confident that we've made the right strategic calls and that will show so over time," said Fallon.

DIVIDEND MAINTAINED

Analyst Ian Whittaker at Liberum, who has a sell rating on Pearson, was sceptical.

"Execution risk is extremely high -- the company is essentially asking shareholders to trust them, again, that they can deliver the numbers when many of the factors influencing their numbers are out of their control," he said.

In a bid to keep investors on side, Pearson said it would not cut its dividend, even though the 52 pence payout would be barely covered by earnings per share forecast to be 50-55 pence in 2016 before the costs of restructuring.

Chief Financial Officer Coram Williams said the dividend was underpinned by confidence that earnings would bounce back in 2018, and in the short term by a balance sheet bolstered by 1.1 billion pounds of proceeds from asset sales.

Pearson, which sold the Financial Times and its stake in The Economist last year to concentrate on education, has been wrong-footed by a strong recovery in the U.S. jobs market, which has reduced the number of mature students going to college.

The group has also found itself at the mercy of politics, as governments in Britain and the U.S. modified student testing, while educational spending in countries such as Brazil and South Africa has proved hard to predict.

Fallon said he was confident that U.S. college enrolments would stabilize and changes in British testing would ease by the end of 2017.

He said based on realistic assumptions, adjusted operating profit would rise to more than 800 million pounds in 2018, higher than analysts expected.

The company is spending 320 million pounds in 2016 on the restructuring. Pearson said the restructuring would involve combining divisions such as its school testing and professional testing divisions in North America to reduce back office costs.

Pearson's shares, which on Wednesday hit their lowest level since July 2009, bounced 16 percent to 763 pence by 1520 GMT, as investors welcomed decisive action and the dividend pledge.

(This version of the story was refiled to fix grammar in the seventh paragraph)

(Editing by Keith Weir)

By Paul Sandle and Kate Holton