Apollo Group Inc announced October 16th that within the next year, 115 smaller locations of University of Phoenix will be closing. University of Phoenix will cut 800 employees (about 5% of its labor force) and will affect 13,000 students. The job cuts do not include faculty
Apollo Group Inc’s fiscal fourth quarter net income had dropped about 60% due to higher cost and declining enrollment from $188.6 million down to $75.4 million. Shares in the company also dropped close to 9% in after-hours trading.
During the summer quarter this year, the percentage of students enrolled in degreed programs at the University of Phoenix fell on a yearly basis by 13.8% to 328,400. Enrollment of new students also declined by 13.7 percent.
Arizona State will be seeing a high number of job losses because the company is headquartered in Phoenix. Only one location in Arizona will close and about 250 of the 800 job cuts will be in the state.
One main reason that led to locations being closed is that students are now more interested in taking online courses. That’s why satellite learning centers aren’t attracting students like they once did and are mostly planned on shutting down.
In the next 2 years, closing these locations will save the company about $300 million which they plan on reinvesting into operations. Although restructuring charges majority from ending leases, will also cost about $175 million.
Apollo estimates that fiscal 2013 revenue will range from $3.65 billion to $3.8 billion. Analysts forecast $4.07 billion.