Apollo Group cuts profit forecast, sign-ups slip again
By Sagarika Jaisinghani
(Reuters) - Apollo Group Inc (APOL.O: Quote), which owns the biggest U.S. for-profit college, reported lower student sign-ups for the third straight quarter and cut its operating profit forecast for 2013.
Apollo, which runs the University of Phoenix, now expects operating income of between $500 million and $550 million for the year ending August 2013, down from its prior forecast of $525 million to $575 million.
"They are going to see more cost savings than they had expected, but yet now they're expecting lower profit, so something strange is going on there," William Blair & Co analyst Brandon Dobell said.
Apollo said in October that it would cut 800 jobs and shut down 25 campuses to save costs, as fewer students signed up at its colleges.
"During the first quarter, we achieved much of our anticipated 2012 fixed cost savings -- earlier than expected," Chief Financial Officer Brian Swartz said on a post-earnings conference call on Tuesday.
General costs fell 8 percent in the first quarter.
"We now expect to realize at least two-thirds of the annual cost savings in fiscal 2013," Swartz added.
For-profit education providers have been plagued by falling enrollments over the last two years in the face of tighter regulations and low job-placement rates. Continued...