Apollo Group Inc., the largest U.S. for-profit college chain, posted fourth-quarter profit and revenue that topped analysts’ estimates even as enrollment fell.
Net income slid 71 percent to $21.6 million, or 19 cents a share, in the three months ended Aug. 31, from $75.4 million, or 66 cents, a year earlier, Apollo, owner of the University of Phoenix, said Tuesday in a statement. Profit excluding some items was 55 cents a share, topping the 25-cent average of estimates compiled by Bloomberg.
For-profit colleges are struggling with heightened competition from traditional universities, student reluctance to take on debt amid high unemployment and state and federal probes that raised questions about the institutions’ job-placement and other marketing claims. Apollo has responded by closing campuses and reducing operating expenses, including an 11 percent reduction in the past quarter.
Apollo “beat expectations on continued aggressive cost control efforts” rather than from an improvement in the number of students signing up for classes, said Peter Appert, an analyst at Piper Jaffray & Co. in San Francisco. He has a neutral rating on Apollo and doesn’t own shares.
Shares of Apollo, based in Phoenix, rose 10 percent to $23.12 at 5:12 p.m. in trading after the close in New York. It gained 2 cents to $20.94 at 4pm. The shares are unchanged this year.
Total enrollment at the University of Phoenix fell 18 percent, to 269,000, from a year earlier, the company said. New enrollment dropped 22 percent.
Sales in the quarter decreased 15 percent to $845 million. Analysts on average projected $824 million. The company reported $67.3 million in restructuring expenses in the fourth quarter.
Apollo said Tuesday it will change its name to Apollo Education Group next month.
Revenue for the fiscal year ending in August 2014 will be $2.95 billion to $3.05 billion, the company said. Analysts had estimated $3.21 billion on average. The company said it expects to reduce its operating costs by $300 million in the current year.
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