Curiously, the Apollo profits warning this does not seem to have been picked up on by The Lawyer or Legal Week as at this morning (as far as I could see) – but it is important because Apollo bought BPP Law School last year as part of their acquisition of BPP Holdings PLC.
The Financial times had this news snippet on Friday: Reed Elsevier, the Anglo-Dutch publisher, was marked 2 per cent lower at 551½p as bid rumours faded and investors focused on a profits warning from Apollo Group, a US higher education provider. Apollo said it expected admissions to fall significantly in 2011. That news also weighed on Pearson, parent company of the Financial Times, off 1.8 per cent to 991p.
FROM THE WIRES had this…
Investors fled for-profit college stocks on Thursday after the sector’s bellwether predicted a 40-percent drop in student enrollment next quarter and withdrew its forecast for next year. The news chilled an industry facing increased government scrutiny over concerns about soaring student loan defaults.
Enrollments at for-profit schools surged during the recession. Big advertising budgets drew students trying to bolster their resumes as a hedge against high unemployment. But critics claim the schools are not helping students find better jobs and say enrollment counselors sign up many students who are unprepared for higher education. When they drop out, they are still stuck paying back their student loans.
Apollo Group Inc., which runs the University of Phoenix, attributes its expected enrollment decline to changing practices aimed at satisfying new government regulations.
This may well cause Apollo problems in the USA – a 40% predicted drop in enrolments is by no means insignificant. Apollo are the owners of the newly created BPP University College. Will this impact on BPP? I’m not sure. BPP is well resourced in the UK and, in law terms at least, does not appear to have any difficulty filling places. Subsidiaries are often affected when parent companies suffer a downturn in profits. Will this be the case here?
I shall ask Peter Crisp, CEO, of BPP University College for his assessment.