AP
Apollo Group 1Q Profit Jumps 23 Percent
Tuesday January 8, 6:42 pm ET
By Chris Kahn, AP Business Writer
Education Company Apollo Group's 1st-Quarter Profit Higher As Enrollment Grows 11 Percent


PHOENIX (AP) -- Apollo Group Inc., an education company that owns the University of Phoenix, said Tuesday its first quarter earnings jumped 23 percent as it boosted enrollment. Its shares surged more than 8 percent in after-hours trading.

The Phoenix-based company reported profits of $139.9 million, or 83 cents per share, for the three months that ended Nov. 30. That compared with $113.9 million, or 65 cents per share, for the same period a year earlier.

Sales totaled $780.7 million for the quarter, about a 17 percent increase from the year-ago period. Total degreed enrollment grew by 11 percent year-over-year to 325,000 students.

Analysts surveyed by Thomson Financial, on average, forecast earnings of 73 cents per share and revenue of $750.9 million.

Apollo released its earnings report after stock markets closed. The company's shares climbed $5.74 to $73.85 in extended trading after falling $2.48 to $68.11 in the regular session.

President Brian Mueller said Apollo has aggressively courted new students, resulting in three straight quarters of double-digit enrollment growth.

In a conference call with analysts, Mueller said working people tend to flock to adult education companies like Apollo when their "wages are not high enough to provide them with a comfortable middle-class lifestyle."

Mueller credited Apollo's enrollment growth particularly to its associate degree program, which he said was dominated by single women who are dependent heavily on the Internet for socializing, entertainment and education.

"They believe education is about earning power," he said.

Investors, however, have worried about those students, who tend to be less educated, make less money and are more likely to drop out than typical students at the University of Phoenix.

The company said it continues to suffer from increasing bad debt that's due in part to write-offs from associate degree students. Apollo reported bad debt expenses of $32.4 million in the first quarter, an increase of 40 percent compared with the same quarter last year.

Apollo also said instructional costs and services rose 13 percent from the first quarter of 2007 to $333.3 million. Selling and promotional expenses increased 14 percent to $177 million, and general and administrative expenses increased 36 percent to $51.3 million.

Apollo offers educational programs and services at 259 locations in 40 states, Puerto Rico, Canada, the Netherlands, and Mexico. Besides the University of Phoenix, Apollo Group operates the Institute for Professional Development, The College for Financial Planning Institutes Corp. and Western International University Inc.

Apollo Group Inc.: http://www.apollogrp.edu