Bloomberg News

Apollo Fourth-Quarter Profit, Sales Top Analysts’ Estimates

October 19, 2011

(Updates with closing share price in fifth paragraph.)

Oct. 19 (Bloomberg) -- Apollo Group Inc., operator of the University of Phoenix and the biggest U.S. for-profit college, posted fourth-quarter profit and sales that beat analysts’ estimates, sending the shares higher.

Net income rose to $188.6 million, or $1.37 a share, from $41 million, or 28 cents, a year earlier, Apollo said today in a statement. Earnings excluding some items was $1.02 a share, topping the 92-cent average of estimates compiled by Bloomberg. While sales fell 11 percent to $1.12 billion, they exceeded the average projection of $1.1 billion.

Apollo instituted a program last year to let students try out classes before enrolling, which helped improve rates of student retention, the company said. Training programs for recruiters will help student signups to grow in the “single- digit” range and remain positive through fiscal 2012, Chief Financial Officer Brian Swartz said on a call with investors and analysts.

“The company is saying they’re going to have a positive growth rate of new student starts,” said Trace Urdan, an analyst with Wunderlich Securities Inc. in San Francisco, who has a “hold” rating on Apollo shares. “That’s off a negative base, but it’s still a signal that things are going to level off and become normal.”

Apollo rose 7.9 percent to close at $46.74 in New York trading. The Bloomberg U.S. For-Profit Education Index of 13 college companies rose 2.6 percent.

2012 Outlook

Apollo raised its fiscal 2012 revenue forecast to between $4.1 billion and $4.3 billion. Three months ago, the for-profit college had projected sales of $4 billion to $4.25 billion for the period. It expects full-year operating income excluding some items of $655 million to $780 million, down from a previous forecast of as much as $800 million, according to the statement.

The company cut fourth-quarter expenses for student recruitment and marketing. Marketing expenses fell 4.6 percent from a year earlier to $171 million, primarily from cuts to spending on Internet advertising, Apollo said.

Admissions advising costs fell 15 percent to $99.4 million after Apollo fired student recruiters last year. Costs for teaching and student advising fell 1.5 percent to $438.5 million as student enrollment fell, the company said.

--Editors: Lisa Wolfson, James Callan

APOL US <Equity< CN

To contact the reporter on this story: John Lauerman in Boston at jlauerman@bloomberg.net

To contact the editor responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net.


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