Apollo Group Shares Plunge as Enrollments Fall (APOL)

For-profit education service provider, Apollo Group Inc. (NASDAQ: APOL) said late last evening that fiscal third quarter income fell 40% as lesser number of students enrolled for its courses.

The Phoenix, Arizona-based Apollo Group, which owns the University of Phoenix said that enrollments dipped 17% to 287,500 students while new students’ sign-ups fell about 25% to 38,900.

Shares tumbled 4.50% in afterhours trading.

Following the sub-prime mortgage and financial crisis of 2008/09, most U.S. for-profit education services provider benefitted immensely as more Americans enrolled for new courses in order to boost their career prospects; nonetheless, that level of enthusiasm ebbed gradually as many schools came under scanner amid stricter Federal regulations.

For the fiscal third quarter ended May 31, Apollo Group said that it almost earned $80 million or 71 cents a share down from a profit of $134 million or $1.13 a share, in the year-earlier quarter.

Stripping out onetime items such as restructuring costs and other items, adjusted earnings stood at $1.05 a share down from $1.18 a share.

Revenue plunged 16% to $946.8 million from $1.12 billion, in the same quarter of last year.

Analysts’ consensus estimate was for earnings of 86 cents a share on revenue of $964.6 million, according to a data compiled by FactSet.

In the backdrop of falling enrollments, Apollo Group is now aggressively cutting costs. In the current fiscal year, the education company expects to cut at least $300 million in costs and in the next fiscal year it aims to slash expenses by $400 million.

For the fiscal 2013, Apollo Group expects revenue to be in the range of $3.65 billion to $3.7 billion while analysts’ consensus estimate is for $3.71 billion.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.