Apollo Group Inc. (APOL), owner of the University of Phoenix and the biggest U.S. for-profit college, said profit in the fiscal third quarter fell 40 percent as new enrollment tumbled.
Net income for the period ended May 31 dropped to $80 million, or 71 cents a share, from $134 million, or $1.13, a year earlier, Phoenix-based Apollo said today in a statement. Excluding some items, the company had a profit of $1.05 a share, beating the 86-cent average of analysts’ estimates compiled by Bloomberg.
Apollo cut total costs by 9.5 percent in the quarter through a restructuring program and by lowering its debt. The for-profit college continues to face increased competition from not-for-profit colleges that are increasingly serving Apollo’s traditional targets: adult students who want to finish uncompleted degree programs, said Peter Appert, an analyst with Piper Jaffray & Co. in San Francisco.
“What’s changed is how much more active the not-for-profits have become in what was once the purview of the for-profit schools,” Appert, who has a neutral rating on Apollo shares, said in a telephone interview. “Fundamentally, there’s too much capacity chasing too little demand.”
Apollo rose 3.2 percent in after-hours trading. The stock gained 1.4 percent to $19.38 at the close in New York. The company has lost 7.4 percent this year.
New students signing up for classes in the period slumped 24 percent from a year earlier to 38,900.
Revenue dropped 16 percent to $946.8 million. That compares with $965.8 million, the average of analysts’ estimates.
Apollo, whose shares have slid 40 percent in the past year, will lose its spot in the Standard & Poor’s 500 Index later this week, S&P said in a statement June 20. Apollo will join the S&P Midcap 400 Index.
(Apollo will hold a conference call at 5 p.m. New York time to discuss the results. To listen, call +1-877-292-6888 in the U.S., or +1-973-200-3381 internationally. The pin is 86623109. The call will also be webcast at http://www.apollo.edu.)
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