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DeVry Preview Release Causes Shares to Tumble

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DeVry, (NYSE: DV) a world wide provider of education services, previewed its fourth quarter earnings today and sent the stock price down substantially in pre-market trading.

The company is now expecting between $500 million to $510 million in revenue with analyst average estimates 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 8:30 AM 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, which caused DeVry to update its projections that resulted in a lower market value for the company. 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 percent year-over-year, an improvement over the spring term. DeVry will eliminate 570 jobs to offset this weakness.

DeVry's announcement has pulled down other for-profit education companies such as Apollo Group (NASDAQ: APOL), which is off more than 8 percent.

Posted-In: Advanced Academics Daniel HamburgerEarnings News Management Pre-Market Outlook


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