This is an excerpt from the Wall Street Journal I read today.
GROUP Appolo (University of Phoenix) lost more than 20% after the education company for profit recorded a sharp drop in quarterly profit, hit by higher costs and declining enrollment at the University of Phoenix.
To cope, the company plans to close 115 of the locations of the mostly small college, a move that will affect 13,000 students. The closures include 25 main campuses and 90 learning centers smaller satellite. At least one location in 30 states is scheduled to be closed.
The% of students from about 4 Apollo affected by the closures will be given the option to transfer to online programs or move your coursework to other sites, said University of Phoenix President Bill Pepicello.
If no other center is close, the company will continue courses in another space near the facility closed until students complete their studies, he said.
The university is in the process of notifying students.
University of Phoenix currently has about 328,000 students, down from a peak of over 400,000. Following the closures, will stay with 112 locations in 36 states, the District of Columbia and Puerto Rico.
The announcement comes as total enrollment in the for-profit sector are declining after years of rapid growth, and enrollment in other sectors of higher education. Recent federal figures showed enrollment profit fell 2.9% in 2011. The sector has faced tougher regulations and more pressure to enroll students who are more likely to graduate.
Shares of other for-profit schools fell in tandem: ITT Educational Services Inc.ESI -0.36% fell 6.3% to $ 27.76, -2.01% DV DeVry Inc. fell 4.4 % to $ 22.18 andStrayer Education Inc. STRA 0.39% shed 6.8% to $ 62.02. Apollo shares fell 22%, or $ 6.09, to close at $ 21.40 on Wednesday.
Another factor in the closures: Students increasingly favor online courses.
University of Phoenix recently announced a tuition freeze in hopes that will help retain students and attract others put off by the rising costs of education.
"People are just holding out money to invest in education, at a time when costs are rising and the results are uncertain," Mr. Pepicello said.
In the June-August quarter, the number of students enrolled in degree programs at University of Phoenix fell annually by 13.8% to 328,400. While enrollments in degree programs was reduced by 13.7%.
This decline led to a 11% fall in the fourth quarter of fiscal revenue for the parent company of the university, which helped weigh gains despite some changes in the price of tuition and other fees.
Apollo reported net income of $ 75.4 million, or 66 cents per share, in the three months ended August 31. That compares with net income of $ 188.6 million, or $ 1.37 per share, a year earlier. Revenue fell to $ 996.5 million from $ 1.12 billion.
For the full fiscal year, net income fell to Apollo $ 422.7 million, or $ 3.45 per share, compared with net income of $ 572.4 million, or $ 4.04 per share, a year earlier . Revenue fell to $ 4.25 billion from $ 4.71 billion last year. Apollo estimates that fiscal 2013 earnings will range between $ 3.65 billion to $ 3.8 billion.
Apollo said it is working on the differentiation of its competitors, with a freeze on tuition for new students and currently enrolled, and work with business partners who send students to the University of Phoenix to make curriculum more focused on his career.
"This quarter and next quarter will have difficulty implementing changes," said Mark Brenner, senior vice president of Apollo communications and external affairs, in an interview, but added that the company expects enrollment growth to continue in the second half of fiscal recently started.