Apollo Group Inc. (APOL) swung to a fiscal second-quarter loss as it again wrote down part of the value of its British school, BPP, and enrollment declines continued.

Shares tumbled 9.7% to $38.25 premarket as enrollment figures came in below some analysts' expectations and the company's long-term guidance looked bleak.

Apollo, which operates the University of Phoenix, projected full-year revenue of $4.65 billion to $4.75 billion, bracketing Wall Street's $4.68 million forecast, and operating income of $1.15 billion to $2 billion, in line with analysts' $1.15 billion forecast. However, the company sees fiscal 2012 revenue coming in at $4 billion to $4.25 billion, below analysts' $4.5 billion forecast, and operating income of $675 million to $800 million, compared with analysts' $1.08 billion estimate.

"We expect declines in new enrollments that we're experiencing in 2011 to be felt more in our financial results in 2012," co-Chief Executive Chas Edelstein said in a conference call Tuesday.

The company has seen its bottom line hurt in recent periods by a shrinking student body and higher student support and marketing expenses. The company tightened admissions standards after it and peers were criticized for lax practices and poor student-loan repayment rates. The schools now face higher advertising costs, too, as they compete to attract high-quality students who stand a chance of completing the programs.

Apollo said Tuesday that degreed enrollment at University of Phoenix dropped 12% to 405,300 in the latest quarter, as new-student starts plunged 45%.

So far in the third fiscal quarter, Apollo said on the conference call, new-student enrollment declines are in line with those reported in the first half of the fiscal year. However, the company does expect to return to new-student enrollment growth in fiscal 2012.

The BPP segment, which focuses on legal and business education, has been affected "significantly, adversely" by economic weakness in the U.K., co-Chief Executive Greg Cappelli said on the call. The company's $219.9 million write-down was its second in three quarters; it booked a $175.9 million asset impairment charge in the fiscal fourth quarter. Apollo, along with Carlyle Group, bought BPP for $607 million in summer 2009.

Despite the current weakness, Cappelli said, "We do remain very optimistic about the opportunity for BPP." Cappelli said the company sees other opportunities for international expansion as well, specifically in India and Latin America.

For the period ended Feb. 28, Apollo reported a loss of $64 million, or 45 cents a share, compared with a year-earlier profit of $92.6 million, or 60 cents a share. Excluding the BPP writedown and estimated litigation losses, earnings from continuing operations dipped to 83 cents from 84 cents. Revenue slid 2% to $1.05 billion, as select tuition increases offset some of the enrollment decline.

Analysts polled by Thomson Reuters most recently predicted earnings of 69 cents on $1.03 billion in revenue.

Expenses jumped 19% amid the writedown and higher marketing costs. Operating margin declined 140 basis points to 18.9%.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

--Matt Jarzemsky contributed to this article.
Apollo Education Group, Inc. (NASDAQ:APOL)
Historical Stock Chart
From May 2024 to Jun 2024 Click Here for more Apollo Education Group, Inc. Charts.
Apollo Education Group, Inc. (NASDAQ:APOL)
Historical Stock Chart
From Jun 2023 to Jun 2024 Click Here for more Apollo Education Group, Inc. Charts.