Apollo Group Profit Falls, Yet Tops Estimates; Stock Up - Update

(RTTNews) - Education provider Apollo Group Inc. (APOL), which owns the University of Phoenix, Tuesday reported a sharp decline in fourth-quarter profit, due mainly on restructuring charges and lower enrollments even as the prior year benefited from discontinued-operations gains. Nonetheless, both earnings and revenue for the quarter topped Wall Street estimates.

Moving forward, the company provided a weak revenue outlook for 2014 even as it is strives to diversify.

Overall, investors were pleased with the announcement, sending Apollo shares surging 15 percent in after-hours trade on the Nasdaq.

"We set out this year to differentiate University of Phoenix, diversify Apollo Group and build a more efficient organization. We have made meaningful progress in each of these areas," said CEO Greg Cappelli.

Phoenix, Arizona-based Apollo posted quarterly net income of $21.6 million or $0.19 per share, down from $75.4 million or $0.66 per share last year.

Results for the recent quarter included restructuring and other charges of $67 million, while the prior-year quarter recorded gains of $26.6 million related to discontinued operations.

Excluding items, adjusted earnings from continuing operations for the quarter were $63 million or $0.55 per share, compared with $58.6 million or $0.52 per share a year ago. On average, 16 analysts polled by Thomson Reuters expected earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the fourth quarter slid to $845 million from $997 million in the prior year, but topped analysts' expectations of $823.6 million.

University of Phoenix Degreed Enrollment was 269,000 for the quarter, a decline of 18 percent from last year, and New Degreed Enrollment fell 22.3 percent to 41,000.

For fiscal 2014, Apollo expects revenue of $2.95 billion to $3.05 billion. Analysts currently expect revenue of $3.21 billion for the year.

Apollo expects to further reduce its fixed operating costs in 2014 by a minimum of $300 million.

The company also shortly plans to change its name to Apollo Education Group to more clearly reflect its purpose.

Apollo stock closed Tuesday's regular trade at $20.94, up $0.02 or 0.10%, on a volume of about 5 million shares. In after hours, the stock gained $3.31 or 15.81%, trading at $$24.25. In the last 52 weeks, the stock traded in the range of $15.98 - $22.91.