Apollo Group's Q4 Profit Rises on Enrollment; Forms JV With Carlyle

Education company Apollo Group Inc., which owns the University of Phoenix, reported Monday that Q4 profit jumped more than a third on strong enrollment. Earnings for the quarter came in at $115.2 million ($0.67/share), up from $94.7 million ($0.54) in the year-ago period. Including items, Apollo earned $103.2 million ($0.60), up from $75.7 million ($0.43) last year and in line with analyst expectations. Revenue rose to $713.9 million, up 14% from last year's $624.9 million and ahead of analyst forecasts of $701.1 million. Total degreed enrollments rose 11% to 313,700. Full-year profit was $408.8 million ($2.35/share) versus $414.8 million in 2006. Total revenue in 2007 was up 10% from 2006 to $2.7 billion. Apollo President Brian Mueller said expanded programs, more productive enrollment counselors and advertising have "proven to be the right investments in the long run. Revenue growth has exceeded our expectation" (full earnings call transcript) Apollo also announced that its board has approved a further buyback of up to $500 million worth of common stock. In related news, Apollo announced Monday that it has formed a $1 billion JV with private equity firm Carlyle Group that will invest in the international education services sector. Apollo will own 80.1% of the venture. At the beginning of Q4, the SEC wrapped up its investigation of Apollo's stock options awards practices. The company said in July it does not expect disciplinary measures to be taken.

Sources: Press release, Thomson Financial I, II, AP, Forbes
Commentary: Apollo's Earnings Show Cost Increases Outpacing Revenue Gains • True Measure of Earnings Success: Top Gainers, Losers So Far
Stocks to watch: APOL. Competitors: CECO, DV, ESI. ETFs: QQXT, RPG, RCD
Earnings call transcript: Apollo Group Inc. F4Q07

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