Apollo results, shares fall on lawsuit charges

By Helen Chernikoff

NEW YORK (Reuters) - Education company Apollo Group Inc (APOL.O: Quote, Profile, Research) posted sharply lower quarterly net results on Thursday due to one-time charges stemming from a class- action lawsuit, sending its shares down more than seven percent.

The company reported a net loss for the second quarter of $32 million, or 19 cents a share, compared with net income of $60.3 million, or 35 cents a share, a year ago.

Excluding the charge of $168.4 million, the company earned $82.6 million, or 48 cents a share.

On that basis, analysts had expected the company, parent of the University of Phoenix, to report earnings of 52 cents a share, according to Reuters Estimates.

Despite the swing to a loss, Chief Executive Officer Brian Mueller reaffirmed in a statement the company's long-term targets of mid-to-high single-digit revenue growth and low double-digit operating profit and free cash flow growth.

Education shares have taken a beating recently as the housing-led credit crunch has crept into student lending, prompting banks to tighten standards and raising the question of whether students at for-profit schools would be able to finance their educations.

Apollo's own shares are off about 40 percent since their year high in mid-January, when they hit $81.68.

Rival DeVry Inc's (DV.N: Quote, Profile, Research) shares are down 23.5 percent at $46.86. Like Apollo, DeVry offers academic undergraduate and graduate degrees such as bachelor's and master's.