Corinthian Colleges shares slump on weak outlook

SANTA ANA, Calif. (AP) — For-profit education company Corinthian Colleges Inc. on Thursday posted a decline in quarterly earnings and revenue and predicted future profit and revenue below analysts' expectations.

The shares plunged in midday trading, down 84 cents or 21.8 percent to $3.04, with trading more than six times normal volume. Their 2012 peak of $5.21 came on Feb. 8.

Corinthian, which operates 119 campuses of Everest, Heald and WyoTech colleges and offers online degrees, said profit in the quarter ending in June would be between 10 cents and 12 cents per share, on revenue of $395 million to $405 million.

Analysts, on average, were expecting the company to earn 15 cents per share, on revenue of $421.3 million, according to data provider FactSet.

The company added that it expects "a number of challenges" in the fiscal year that starts in July, including a loss of federal funding for students who didn't graduate from high school. The Santa Ana company is responding by expanding programs that help students get the equivalent of a high school diploma.

CEO Jack Massimino said the company has taken steps to reduce bad debt and improve loan-default rates. Corinthian has also completed the sale and lease-back of five Heald campuses and is selling or closing seven Everest campuses, he said.

In the fiscal third quarter, which ended in March, net income fell to $4.1 million, or 5 cents per share, from $16.1 million, or 19 cents per share, in the 2011 quarter. The company said that excluding discontinued operations, write-downs and severance charges, it would have earned 15 cents per share.

Analysts, who usually exclude one-time items, expected 16 cents per share.

Revenue fell 7 percent to $424.1 million from $455.5 million, and below analysts' forecast of $435 million.

New enrollment rose 1.8 percent in the quarter to 29,427, but the total number of students fell 4.2 percent to 96,631.