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Tuesday, February 28, 2006

For-Profits
Not Profitable

Those who assure us that for-profit colleges are the wave of the future should be aware that the industry is currently tanking. The leading company, Apollo, which runs the University of Phoenix, has issued “disappointing second quarter guidance,” and has “yank[ed] its already lowered 2006 outlook.”

Shares of the company plunged $8.31, or 14.2 percent, to $50.16 in afternoon trading on the Nasdaq after earlier hitting a low of $49.51. The stock is down 17 percent so far this year, and has not traded this low since March 2003.

Investors also sent shares of Apollo's biggest rivals sharply lower in trading -- with many hitting new 52-week lows of their own.

DeVry Inc. shares dropped $1.05, or 4.3 percent, to $23.44, and earlier reached a 52-week low of $23.24 on the New York Stock Exchange. ITT Education Services Inc. shares fell $2.69, or 4.2 percent, to $61.76 on the Big Board.



The article talks vaguely about changing demographic trends in student populations, but the real problem, endemic to such schools, is illegal or close to illegal student recruitment tactics for the sake of federal funds. The schools are more or less always under investigation, which makes running them difficult.
Posted at: 2/28/2006 02:27:00 PM