* Sees adj Q4 EPS $0.43-$0.46 vs est $0.78
* Sees Q4 revenue of $500 mln-$510 mln vs est $516.7 mln
* To cut 570 jobs
* Shares down 22 pct aftermarket
(Adds analyst comment; updates shares)
By Megha Mandavia
July 23 (Reuters) – For-profit education provider DeVry Inc
warned that profit for the June quarter will fall far
short of market expectations as it spends more to boost falling
enrollment at its many colleges, sending its shares plunging 23
percent.
Enrollments at for-profit colleges have taken a hit after
colleges tightened their admission policies to meet stricter
regulatory requirements aimed at reducing student debt.
Prospective students are also getting increasingly averse to
the idea of taking out costly education loans, given the high
unemployment rates, forcing colleges to spend more on
scholarships and other incentives to lure new students.
“The bigger piece was the higher cost structure relative to
the enrollment levels and if you roll that forward into fiscal
2013, that is going to have a disproportionate hit to earnings,”
Morningstar analyst Peter Wahlstrom said.
DeVry — which runs Keller Graduate School of Management,
Chamberlain College of Nursing, Ross University and the
Carrington Colleges Group — said it expects new enrollment to
fall 15 to 17 percent at its DeVry University and 19 to 21
percent at Carrington Colleges.
A fall in revenue was partly due to increase in scholarships
awarded to students in DeVry University’s May and July classes,
the company said. It also spent more money on inquiry
generation.
DeVry plans to eliminate 570 jobs, in the fourth and the
first quarter, and targets savings of at least $50 million in
fiscal 2013.
Late last month, market leader Apollo Group Inc had
projected a drop in student sign-ups for another quarter and
said it would cut costs to offset lower revenue.
BLEAK FOURTH QUARTER
DeVry expects fourth-quarter adjusted earnings of 43 to 46
cents per share, on revenue of between $500 million and $510
million.
Analysts were expecting earnings of 78 cents per share on
revenue of $516.7 million, according to Thomson Reuters I/B/E/S.
DeVry said it expects total operating costs and expenses to
be between $465 million and $475 million, a 6 percent to 9
percent jump from last year.
Shares of the company, which closed at $27.56 on Monday on
the New York Stock Exchange, were down 22 percent in aftermarket
trade.
(Reporting by Megha Mandavia in Bangalore; Editing by Anil
D’Silva, Sriraj Kalluvila)
