DOW JONES NEWSWIRES
Apollo Group Inc. (APOL) swung to a fiscal second-quarter profit
on higher enrollment as well as a prior-year litigation charge.
Shares fell 1.7% to $76.99 in after-hours trading from the
Tuesday close of $78.33, although the results topped Wall Street's
expectations.
For-profit educators such as Apollo generally have benefited
from rising unemployment because of increased interest in
retraining and continued education. In addition, Apollo has boosted
marketing efforts and repositioned its brand, added degree programs
with broad appeal and hired more enrollment counselors.
"We are pleased with the growth in revenue and enrollments in
our second quarter and we believe we are continuing to benefit from
investments we are making in key academic and operational areas,"
said Chief Executive Charles B. Edelstein.
For the quarter that ended Feb. 28, the operator of the
University of Phoenix reported net income of $125.3 million, or 77
cents a share, compared with a net loss of $32 million, or 19 cents
a share, a year earlier.
The prior-year quarter's results included a $168.4 million
pretax charge for estimated damages stemming from a securities
class-action lawsuit. That charge was later reversed after a
federal judge overturned a securities-fraud verdict that could have
forced the company to pay out as much as $280 million.
Revenue climbed to $876.1 million from $693.6 million.
Analysts' estimates were for earnings of 65 cents a share on
revenue of $865.5 million, according to a poll by Thomson
Reuters.
Degreed enrollment grew 20% to 397,700 at the University of
Phoenix, the nation's largest private university, and new degreed
enrollment climbed 23%.
Instructional costs and services grew 14% while selling and
promotional expenses increased 12%. General and administrative
expenses climbed 29%.
The company also announced Tuesday promotions for several
executives. Chief Financial Officer Joseph L. D'Amico was named to
the new position of chief operating officer and will be replaced as
finance chief by Chief Accounting Officer Brian L. Swartz.
Controller Gregory J. Iverson will become chief accounting
officer.
So far, Apollo has been relatively immune to the private
student-lending crunch. Title IV government grants and loans cover
most of the cost of Apollo's tuition with students also using their
money or tapping other sources, such as state grants or corporate
tuition-reimbursement programs, to cover the cost.
Some worry the slumping economy could cause some companies to
reduce corporate tuition reimbursement, which provides about
one-fifth of Apollo's annual revenue.
Apollo's stock price soared 95% in the past year but has fallen
18% from its 52-week high in January.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com