Apollo's Gloomy View Sparks Slide

Apollo Group (NASDAQ:APOL) swung to a fiscal second-quarter loss amid a 45% plunge in new enrollment and warned of weaker-than-expected fiscal 2012 results, sparking a 10% slide in the education company’s stock.

Phoenix-based Apollo said it lost $64 million, or 45 cents a share, in the quarter ended February 28, compared with a profit of $92.6 million, or 60 cents a share, a year earlier. Excluding one-time items, it earned 83 cents a share, widely exceeding consensus calls for 69 cents.

Apollo, which owns the University of Phoenix, said its revenue slipped 2% to $1.05 billion, narrowly surpassing estimates for $1.03 billion.

However, Apollo warned of weak results to come, saying it sees fiscal 2012 operating income of $675 million to $800 million on revenue of $4 billion to $4.25 billion. Even the most bullish end of that view would widely miss the Street’s view of $1.08 billion in operating income on revenue of $4.51 billion.

Apollo said its degreed enrollment at the University of Phoenix declined 11.6% to 405,300 last quarter, due mostly to a 44.9% dive in new degreed enrollment.

“We continued to execute on the key strategic initiatives that we’ve been developing and implementing, which are designed to enhance the student experience, expand student protections and ensure that we enroll students who we believe have a greater likelihood to succeed in our programs,” co-CEO  Greg Cappelli said in a statement. “While these initiatives are resulting in a period of transition for our business, we are pleased that we have recently begun to see signs of improvement in several of the leading indicators of future activity.”

Shares of Apollo retreated on the gloomy guidance, sinking 9.52% to $38.33 Tuesday morning. The selloff cut the company’s 2011 gain to 7.2% and left it 33% in the red over the past year.