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  • Apollo Group In For A Volatile Ride In The Short Term [View article]
    Gary, why did you write this article? Were you paid by Apollo (they spend between 30% and 40% of revenues on marketing and advertising, not on curriculum)? The courses are basically glorified chat rooms mediated by less than diligent adjuncts. The revenues continue to fall at a 15% pace, so the acquisitions are too small to add any accretive revenue. Their cash balances have fallen by 75% in 3 or 4 years, because cost cutting does not work. Operating profits are falling much faster (25%) than enrollment or revenues (15%). The job placement rate of the University of Phoenix is only 10%, the completion rate of a degree program is about 45%, but average student debt is greater than $40,000. Did you know that many courses have curriculum and text books that are more than 5 years old? What happened to the advantage of being on-line and being state of the art?
    Aug 14 03:06 PM | Likes Like |Link to Comment
  • Apollo Education Group: Turnaround In Play With Compelling Valuation [View article]
    I wonder if Mr. Waldron was in some way either compensated or very much influenced by Apollo Group in the writing of this article. First of all, how can a company, whose client base, in this case both new and continuing enrollment, is contracting at an increasingly rapid pace, be a good investment opportunity? Enrollment was initially declining at a 15% pace beginning 2 years ago, now its 17% for new enrollment and -22.3% for continuing enrollment?

    If you read the fundamentals on Apollo Group's SEC filings (10-Q, 10Q, Proxy, etc) other disturbing trends emerge. For the second year in a row, the company's cash position has fallen by at least $600 million. Cash now stands at a bit over $700 million. Where is this money going? The balance is contracting in size, and no new investment is being made in fixed assets or capitalized software for its online program, so where is the money going. The company does not pay dividends, so that is not the answer, either.

    From a business standpiont, the company is way behind in efforts to upgrade its online Classroom technology. The newly deisgned classroom, which is more cosmetic, but does provide some better integration of things like the course syllabi with the automatic assignment submission and grading tools, has been delayed over the past 2 years, and may not start rolling out until after June 2014. Intenally, the company struggles with developing internal web pages for its various departments.

    The curriculum has not been upgraded in a long time. There are efforts underway now to partner with industry verticals to develop more career and job relevant curriculum. Also it seems that Apollo is encouraging its schools to emphasize short term certificate programs, rather invest in its degree programs. The television advertising continues at an aggressive spend, despite the feedback from accreditation organizations and the Federal Government.

    Finally from a governance standpoint there are some important questions. First of all, in a company whose revenues and profits are falling at 15% per year, why are top executives rewarded with generous bonus awards, and obviously low budget targets in terms of revenues and profits, so that the executives actually received bonus awards of about 134% of target bonus. This is while staff is being laid off, and those remaining are under tremendous pressure, and are not receiving any where near the compensation of senior management. Long term employees might have been granted between 100 and 500 shares of APOL over the year, but new senior management and board members get 5 figure share grants or more immediately. The new COO got about $3 million or more to join, and he lacks an education industry background, he comes from Cable TV.

    The game Apollo is playing of underprojecting its quarterly earnings, while they are falling and beating the estimates, causing earnings new focused investors and traders to react and make the stock pop up is deceptive. There is no fundamental reason why the stock has doubled since its $16 bottom. Greg Capelli's background is not in education, it is as an analyst and in investment banking. He has been able to apply this experience in the short term, after coming and presiding over what is basically a melt-down of a market leader.

    The international acquistions as well as the prior acquisition of Carnegie Learning, are opportunities for Apollo to learn and improve itself in the long run, if it can, culturally. However, these moves are too small and too late to have a material impact on results.

    So what is really going on here with APOL? I can't figure it out. "So for that reason, I'm out." as they say on Shark Tank. Actually, I have never been in, but I have watched APOL and the education segment since 1999.
    Jan 19 10:29 AM | Likes Like |Link to Comment
  • Apollo's 1Q Results Show Why We Don't Like The For-Profit Education Space [View article]
    I am much in agreement with this article. I have a difficult time understand some of the hyping of Apollo's supposed turn around plan. I cannot fathom its stock rise, unless one looks simply at 12 months' trailing measures and ratios.

    First of all, how can a company, whose client base, in this case both new and continuing enrollment, is contracting at an increasingly rapid pace, be a good investment opportunity? Enrollment was initially declining at a 15% pace beginning 2 years ago, now its 17% for new enrollment and -22.3% for continuing enrollment?

    If you read the fundamentals on Apollo Group's SEC filings (10-Q, 10Q, Proxy, etc) other disturbing trends emerge. For the second year in a row, the company's cash position has fallen by at least $600 million. Cash now stands at a bit over $700 million. Where is this money going? The balance is contracting in size, and no new investment is being made in fixed assets or capitalized software for its online program, so where is the money going. The company does not pay dividends, so that is not the answer, either.

    From a business standpoint, the company is way behind in efforts to upgrade its online Classroom technology. The newly designed online Classroom, which is more cosmetic than offering any innovative methods of online instruction, but does provide some better integration of routine aspects of administering and managing a course, which are kind of low value and mundane, has been delayed over the past 2 years, and may not start rolling out until after June 2014. Internally, the company struggles with developing internal web pages for its various departments. It has also botched a recent rollout of a payroll system. How can a company like this continue to provide leadership in the online education space?

    The curriculum has not been upgraded in a long time and many course designs and assignments have errors and references to no longer available materials, including websites. There are efforts underway now to partner with industry verticals to develop more career and job relevant curriculum. Also it seems that Apollo is encouraging its schools to emphasize short term certificate programs, rather invest in its degree programs. This may allow them to lessen their reliance on student loans, and possibly get integrated with corporations who need their employees to gain specific skills and certifications. But this may not compare to the level of revenues obtained per student in degreed programs? I'm not a Wall Street Analyst so I have not explored this in detail. The television advertising continues at an aggressive spend, despite the feedback from accreditation organizations and the Federal Government. The commercials are confusing, and mostly feed people's aspirations, with promises of getting hired because you wear UPOX's "red socks" which are also being worn by the HR manager at your first interview, or that you might join a wall of fame, which is actually full of mostly middle management people, and some public sector departmental leaders. But it is not a key to the executive suite, most surely.

    Finally from a governance standpoint there are some important questions. First of all, in a company whose revenues and profits are falling at 15% per year, why are top executives rewarded with generous bonus awards, and obviously low budget targets in terms of revenues and profits, so that the executives actually received bonus awards of about 134% of target bonus. This is while staff is being laid off, and those remaining are under tremendous pressure, and are not receiving any where near the compensation of senior management. Long term employees might have been granted between 100 and 500 shares of APOL over the year, but new senior management and board members get 5 figure share grants or more immediately. The new COO got about $3 million or more to join, and he lacks an education industry background, he comes from Cable TV.

    The game Apollo is playing of underprojecting its quarterly earnings, while they are falling and beating the estimates, causing earnings new focused investors and traders to react and make the stock pop up is deceptive. There is no fundamental reason why the stock has doubled since its $16 bottom. Greg Capelli's background is not in education, it is as an analyst and in investment banking. He has been able to apply this experience in the short term, after coming and presiding over what is basically a melt-down of a market leader.

    The international acquistions as well as the prior acquisition of Carnegie Learning, are opportunities for Apollo to learn and improve itself in the long run, if it can, culturally. However, these moves are too small and too late to have a material impact on results.

    So what is really going on here with APOL? I can't figure it out. "So for that reason, I'm out." as they say on Shark Tank. Actually, I have never been in, but I have watched APOL and the education segment since 1999.
    Jan 19 10:27 AM | 2 Likes Like |Link to Comment
  • Zulauf pans China, likes gold and Treasurys [View news story]
    You might also recommend the Swiss Franc ETF. By law, the value of Swiss Francs in circulation or on deposit is backed at least 40% in Gold bullion held in the name of the Swiss government.
    Jan 19 10:27 AM | Likes Like |Link to Comment
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