Devry Preview Release Sends Price Tumbling

Devry Preview Release Sends Price Tumbling DeVry Inc DV a world wide provider of education services company; previewed it's fourth quarter earnings today sending the stock price down substantially in pre-market trading. The company is now expecting between $500 million and $510 million in revenue. Analyst average estimate was for more than $516 million. Total operating costs and expenses in the quarter are now anticipated to be between $465 million and $475 million, which will produce earnings per share in the range of $0.43 to $0.46 as opposed to the consensus estimate of $0.78 This news caused the stock to be down over 29% at 8:30AM this morning. Devry cited recent factors that negatively impacted expectations: Less revenue from more scholarships awarded in May and July. Additional monies spent on marketing and instructional costs. An accrual remaining from its Federal Perkins loan program. Revenue at Advanced Academics was significantly lower than expected. DeVry has updated its projections, which resulted in a lower market value for Advanced Academics. This lower valuation is expected to result in an impairment charge of roughly $18 million or $0.28 per share. There is also a restructuring charge of about $7 million related to workforce reductions of $4 million or $0.07 per share. “While we are disappointed with this quarter's results, we are optimistic about mid and long term growth in higher education,” said Daniel Hamburger, DeVry's president and CEO. New enrollments for the summer are expected to drop approximately 16% year-on-year, an improvement over the spring term. DeVry will eliminate 570 jobs to offset this weakness. DeVry's announcement is pulling down other for profit education companies as well Apollo Group APOL is off more than 8% as well.