Apollo Tumbles on Declines in Student Enrollment and Revenue

March 29 (Bloomberg) -- Apollo Group Inc. (APOL), operator of the University of Phoenix and the biggest U.S. for-profit college, fell the most since January in New York trading, after projecting declines in new student enrollment and revenue.

Apollo expects to report revenue of $4 billion to $4.25 billion in the year ending August 2012 and operating income, not including special items, of $675 million to $800 million, the Phoenix-based company said today in a statement. Analysts had estimated $4.55 billion in revenue and $1.1 billion in operating profit, according to a survey by Bloomberg.

Apollo’s new student enrollment may decline for the next several quarters as the company institutes a program that lets students sample classes before enrolling, Co-Chief Executive Officer Greg Cappelli told investors today in a conference call. Apollo is changing its approach as the U.S. Education Department and Congress question the student-loan defaults, dropout rates and debt levels of those attending for-profit colleges.

“We’re not making any excuses,” Cappelli said. “This has been a very challenging year. But we’re absolutely committed to always doing the right thing for our students.”

Apollo reported a net loss of $64 million, or 45 cents a share, in the second quarter ended Feb. 28, compared with a profit of $92.6 million, or 60 cents, a year earlier, according to the statement.

The company fell $1.80, or 4.3 percent, to $40.55 at 4 p.m. in Nasdaq Stock Market composite trading after dropping as much as $4.35, or 10 percent, to $38, the biggest intraday decline since Oct. 14.

New Enrollment

New student enrollment at the University of Phoenix fell 45 percent to 48,200 from a year earlier, Apollo said in the statement. Analysts had expected the figure to decline by 42 percent.

Apollo reported a loss primarily because it reduced the value of its U.K.-based BPP business, which had larger-than- expected enrollment declines, the company said in a conference call. That item and others reduced profit by about $222 million. Without these items, the company said income was $118.2 million, or 83 cents a share. The average estimate of 19 analysts surveyed by Bloomberg was 69 cents a share.

The Bloomberg U.S. For-Profit Education Index of 13 companies fell 1.5 percent. ITT Educational Services Inc. (ESI), based in Carmel, Indiana, fell $2.30, or 3.3 percent, to $68.37 in New York Stock Exchange trading. Strayer Education Inc. (STRA), based in Arlington, Virginia, fell $6.61, or 5 percent, to $127.06 in Nasdaq composite trading.

To contact the reporter on this story: John Hechinger in Boston at jhechinger@bloomberg.net.

To contact the editor responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.