BUSINESSWEEK ONLINE : FEBRUARY 7, 2000 ISSUE
COVER STORY

The Business of Education


In the past few years, more than a dozen companies have sprung up to run 
public schools for profit. Some experts predict that within a decade, they will 
grab 10% of the $360 billion now spent on kindergarten to 12th grade. Among the 
major players:

                  REVENUES*/
COMPANY           LOSS*            INVESTORS

ADVANTAGE         $60 million/     Raised $35 million from Chase
SCHOOLS           Unprofitable     Capital, Fidelity Ventures, U.S.
FOUNDED 1996                       Trust, and Kleiner, Perkins,
(16 SCHOOLS                        Caufield & Byers.
9,000 STUDENTS)

BEACON            $27 million/     Venture capitalist William R.
EDUCATION         Unprofitable     Hambrecht has invested
MANAGEMENT                         $6 million.
FOUNDED 1992
(26 SCHOOLS
4,700 STUDENTS)

EDISON            $217 million/    Raised some $230 million from
SCHOOLS           -$38 million     J.P. Morgan Investment Corp.,
FOUNDED 1992                       DLJ Capital, and others, plus
(79 SCHOOLS IN                     additional $122 million in a
16 STATES                          November, 1999, IPO.
38,000 STUDENTS)

LEONA             $55 million/     Financed by  shopping mall
GROUP             Says it is       developer A. Alfred Taubman.
FOUNDED 1996      making a
(35 SCHOOLS       modest
10,000 STUDENTS)  profit

NATIONAL          $50 million/     Principal investor is Michigan
HERITAGE          Unprofitable     industrialist J.C. Huizenga, with
ACADEMIES                          about $50 million. In January,
FOUNDED 1995                       raised $35 million more from
(22 SCHOOLS                        private investors, plus additional
8,000 STUDENTS)                    $50 million of bank debt.

TESSERACT         $37 million**/   Has been public since 1991.
GROUP            -$10.7 million
FOUNDED 1986
(36 SCHOOLS
7,000 STUDENTS)


COMPANY             COMMENTS

ADVANTAGE           Targets troubled urban school systems
SCHOOLS             with discipline, uniforms, a longer
FOUNDED 1996        school day, and a curriculum that gives
                    teachers scripts for teaching.

BEACON              Allows significant local input into the
EDUCATION           program each school uses. Is developing
MANAGEMENT          proprietary 7th- to 12th-grade curriculum
FOUNDED 1992        with project-based learning, use of tech-
                    nology, and career exploration.

EDISON              Provides every child in third grade or
SCHOOLS             above a computer to use at home. Hired
FOUNDED 1992        former Yale President Benno Schmidt Jr.,
                    now Edison's chairman, to lead three-year
                    effort to develop world-class curriculum.

LEONA               Unlike many for-profits, its schools vary
GROUP               widely in curricuum and approach.
FOUNDED 1996        Says it makes money thanks to lean cost
                    structure.

NATIONAL            Traditional schools that offer back-to-
HERITAGE            basics curriculum with a heavy emphasis
ACADEMIES           on discipline, conservative moral values,
FOUNDED 1995        and parental involvement. Popular with
                    parents, but critics charge they are run
                    ning a Christian academy.

TESSERACT           Stock is trading under 1, following huge
GROUP               losses. Hired investment banker in late
FOUNDED 1986        December to explore strategic alternatives.
                    Was first for-profit company to run a
                    public school.

*ESTIMATES FOR FISCAL 2000
**ESTIMATES FOR FISCAL 1999

DATA: BUSINESS WEEK


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RELATED ITEMS
For-Profit Schools

COVER IMAGE: For-Profit Schools

TABLE: The Business of Education

TABLE: For-Profit Charters: A Primer

ONLINE ORIGINAL: Edison's Chris Whittle: ``Winners of This Race Are Children''

Going to Bat for Vouchers

TABLE: Vouchers: The Tussle Continues

ONLINE ORIGINAL: John Walton: ``Making a World-Class Education Available to Every Child''

ONLINE ORIGINAL: It's Time for a Refresher Course in Education Stocks



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