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Apollo Group shares rally as Q2 results top views despite drop in enrollment

Published: 00:27 26 Mar 2013 AEDT

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Apollo Group (NASDAQ:APOL), the for-profit school operator, saw its shares surge Monday in premarket activity, after posting second quarter results that came in ahead of analysts’ expectations despite a drop in enrollment.

Shares of the company were up 8.27 per cent in premarket activity, trading at $18.45.

For the quarter that ended February 28, net income fell sharply to $13.5 million or 12 cents per share, from $63.9 million or 51 cents per share, a year earlier. 

Excluding items, profit was $38.0 million or 34 cents per share, compared to $72.2 million or 57 cents per share. 

Apollo said the decrease in income was a result of lower enrollment and an increase in marketing costs.

Net revenue fell 13 per cent to $834.4 million, compared to $962.7 million in the year-ago quarter.

Analysts polled by Thomson Reuters had called for earnings of just 18 cents, however, on sales of $822.8 million.

"Higher education is rapidly evolving as workforce demands and technological innovations drive change in our global economy," said CEO Greg Cappelli. 

"We are further positioning our organization and brand with our continued commitment to help students acquire real workplace skills, achieve their academic goals, and - through the power of education - realize their career aspirations." 

Total enrollment at the company’s University of Phoenix fell 15 per cent to 300,800, compared to 355,800 in the year ago period.

Meanwhile, new enrollment plunged 20 per cent to 38,900 from 48,700 in the same quarter of 2012.

Late last week, the company said its board approved a share buyback authorization up to a total amount of $250 million. There is no expiration date on the repurchase authorization, it added.

For the full-year 2013, Apollo said it expects revenue of between $3.65 billion and $3.75 billion and operating income of $500.0 million to $550.0 million, excluding items.

Analysts are calling for full-year revenue of $3.73 billion.

Apollo Group is a private education provider that offers programs and services both online and on-campus through its subsidiaries, the University of Phoenix, Apollo Global, and the Institute for Professional Development and College for Financial Planning. 

 

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