* Analysts had expected 1st-qtr revenue to fall about 4 pct
* Company expects first-quarter sign-ups to rise about 5 pct
* Shares drop 4 pct
By Sagarika Jaisinghani
Feb 12 For-profit education provider Capella
Education Co said it expects student sign-ups to
increase for the third straight quarter in the three months to
end-March, but expressed doubts about whether the upswing would
be sustained through the year.
Capella, which offers mainly online courses, said it expects
new enrollments to grow by about 5 percent in the current
quarter. But Chief Executive Kevin Gilligan said the company was
still feeling the effects of a big drop in enrollments in the
first two quarters of 2012, which would drag down revenue during
the first half of 2013.
Shares of the company, the owner of Capella University, were
down 4 percent at $30.83 in morning trading on the Nasdaq. They
have shed 35 percent of their value in the last year.
The owner of Capella University said it expects revenue to
fall by about 4.5 percent to 5.5 percent in the quarter. It did
not provide a specific forecast for revenue beyond the first
Analysts on average were expecting revenue of $105.2 million
for the current quarter, implying a fall of about 4 percent,
according to Thomson Reuters I/B/E/S.
Capella does not usually provide a profit forecast, but BMO
Capital Markets analyst Jeff Silber said the company's revenue
forecast implied first-quarter earnings in the range of 61 cents
to 67 cents per share. That is also well below the average
estimate of 77 cents per share.
Stricter admissions policies, low graduation rates and a
weak U.S. job market have hurt enrollments at for-profit
education providers over the last two years.
Companies such as Apollo Group Inc, DeVry Inc
and ITT Educational Services Inc have ramped up
their spending on marketing to woo more students.
However, their efforts have generally borne little fruit so
far as jobless rates remain high.
Gilligan said the company could return to total enrollment
and revenue growth in 2014 if new enrollments rise uninterrupted
New enrollments -- which grew for the first time in nearly
two years in the September quarter -- rose 0.6 percent in the
fourth quarter ended Dec. 31.
Capella's attributable net income fell 29 percent to $8.6
million, or 68 cents per share.
The Minneapolis-based company recorded a valuation allowance
on foreign deferred income taxes that reduced net income by 5
cents per share. Excluding the allowance, Capella earned 73
cents per share, missing analysts' estimates by a cent.
Revenue dropped 3 percent to $107 million, but beat
analysts' expectations of $106.1 million.