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Corinthian Colleges Profit Climbs 50%

Acquisitions and higher student enrollment on campuses and through the Internet boost fiscal fourth-quarter results.

August 28, 2003|Leslie Earnest | Times Staff Writer

Corinthian Colleges Inc. said Wednesday that its fiscal fourth-quarter profit rose 50% as the company continued to expand and student enrollment swelled 26% from last year's.

Although the Santa Ana-based operator of vocational and technical training schools beat Wall Street's expectations, it apparently was not by enough to satisfy some investors, who shaved 2% off the price of its shares.

The stock, which has gained 71% over the last year, fell $1.25 to $54.76 on Nasdaq.

Some investors may have felt the results weren't quite strong enough to justify the run-up in the stock price, said Gary Bisbee, an analyst with Lehman Bros. Investors also were disappointed that Corinthian did not boost profit expectations for the current year.

"That has led some investors to believe maybe the growth rate is slowing, or that the company will not be as likely to exceed the consensus expectations in the future," Bisbee said. "I continue to believe the company is being conservative and that there is an upside."

Corinthian said earnings for the quarter ended June 30 were $18 million, or 39 cents a share, compared with $12 million, or 27 cents, a year ago. A consensus of analysts polled by Thomson First Call expected earnings of 37 cents.

Revenue jumped 47% to $138.9 million. Revenue at schools owned and operated by the company for at least a year rose 28%.

The company attributed the strong results to its acquisitions, along with the opening of new branches and new programs that helped boost student enrollment in all programs to more than 43,000 for the year.

Registration in online courses skyrocketed 82% for the year as the company beefed up its Web-based offerings.

"We're very pleased with the results of operations for the quarter and for fiscal 2003 and we expect to carry that momentum into 2004," Chief Financial Officer Dennis Beal said.

Corinthian said it expected earnings of 36 cents to 37 cents a share in the fiscal first quarter ending Sept. 30, and $1.77 to $1.80 for the year ending June 30.

Although those numbers were in line with Wall Street's projections, analysts said investors had grown used to hearing even better news than they expected from Corinthian, which nearly doubled the number of colleges it operates with three acquisitions this month.

The company operates 125 colleges in the U.S. and Canada, along with 17 continuing education and corporate training centers. It is in a niche that has been thriving as young people and working adults increasingly have enrolled in programs to boost their skills in a wobbly job market.

Schools such as Corinthian's Bryman College, which trains medical and dental technicians, are doing particularly well as more people seek jobs in health care, Bisbee said.

"With the economy the way it's been and the job market difficult, the general trend is toward the need for more skilled labor," he said. Schools such as these help people gain specific skills, usually for entry-level positions, and then help them land jobs.

Corinthian also has colleges that offer accredited degrees up to the master's level.

For the year, earnings rose 69% to $65.9 million, or $1.43 a share, compared with $38.9 million, or 87 cents, the previous year. Analysts had been expecting profit of $1.41 a share.

Revenue for the year was $517.3 million, up 53% from fiscal 2002.

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