Bridgepoint Education To Produce Its Own Online Texts
May 20 2010 - 9:29AM
Dow Jones News
Bridgepoint Education Inc. (BPI) is taking control of its school
bookstore, bringing it inhouse and online to better control content
and boost revenue.
The for-profit college, whose student base is 99% online, is
launching a suite of Web-based course materials for general
education classes this spring, with more discipline-specific
e-texts coming in the next two years. While Bridgepoint is touting
the program, called Constellation, as an opportunity for students
to save cash as they avoid markups from third-party sellers, the
school also expects to make money on the venture as it sidesteps
fees paid to outside vendors.
"The potential impact on earnings from this simple change is
enormous," Trace Urdan, an analyst with Signal Hill Capital Group,
wrote in a note to analysts.
Bridgepoint doesn't expect to see any gain this year, as it
subsidizes some books for students. But with 30% of students using
the inhouse texts in 2011, and 75%-80% by 2012, the school will
have a large revenue stream. Prior to this move, Bridgepoint used
textbooks from third parties, but now many of the e-texts will be
authored by school faculty and consultants.
Bridgepoint wouldn't provide specific revenue projections, but
Chief Financial Officer Daniel Devine said he expects Constellation
to have a "favorable" margin impact. The company has never
recognized textbook revenue.
Urdan believes Bridgepoint stands to add as much as 75 cents to
$1 in incremental per-share earnings in fiscal 2012. Bridgepoint's
2009 earnings totaled $1.26 a share, excluding items.
Bridgepoint isn't the only school innovating online, though its
moves will have the most direct financial impact. Other for-profit
colleges are beefing up their student support services to help
boost student persistence, a metric that came under fire after
enrollments grew quickly in the last few years but graduation rates
didn't.
While schools are taking a variety of steps online to improve
student retention, the activities generally relate to forging a
campus feel.
"That sense of community, it's central to shoring up the value
proposition," said Urdan. It can become especially important as
more ground-based campuses with well-developed social networks
venture online.
Grand Canyon Education Inc. (LOPE), for example, is in the
process of adding tools that allow students to see which of their
classmates are online, according to Chief Information Officer Joe
Mildenhall.
Apollo Group Inc. (APOL) is bolstering its networking
capabilities so a University of Phoenix student who doesn't have
any classmates online at 4 a.m. can find someone from a different
section of the same course to help with a tough statistics
problem.
"A lot of times, online classes can be alienating," said Amy
Junker, a senior analyst with Robert W. Baird & Co. Students
need the "feeling that someone is there to help you."
Co-Chief Executive Gregory Cappelli said Apollo is spending
"hundreds of millions" of dollars on technology, though Apollo
declined to provide further details on expenditures.
Still, it's not enough to create online study groups. As
competition heats up online, with more schools offering hybrid
online/offline courses, for-profit schools are stepping up their
customer service offerings.
Capella Education Co. (CPLA) last month officially released its
new student portal, providing alerts for financial aid deadlines,
updates on when professors issue grades and an easy-to-access
degree completion plan showing a student's progress toward
graduation.
"You can't walk down the hall to the registrar when you're
sitting in your underwear at night," said Jeffrey Silber of BMO
Capital, explaining the need for making such services accessible
online. "You have to do a lot of hand-holding for online
students."
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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