Apollo Group Inc. said Tuesday that its fiscal fourth-quarter net income tumbled 60 percent, hurt by higher costs and declining enrollment at the University of Phoenix. To cope, the for-profit education company plans to close 115 of the university's mostly smaller locations, a move that will affect 13,000 students.
Shares in the Phoenix-based company tumbled nearly 9 percent in after-hours trading.
The closings include 25 main campuses and 90 smaller satellite learning centers. At least one location in 30 states is slated to be shuttered.
The roughly 4 percent of Apollo students affected by the closures will be given the option of transferring to online programs or moving their course work to other sites, said University of Phoenix President Bill Pepicello.
If no other center is nearby, the company will continue courses at other space near the closed facility until students complete their degrees, he added.
The university is in the process of notifying students.
University of Phoenix currently has about 328,000 students, down from a peak of more than 400,000. Following the closures, it will be left with 112 locations in 36 states, the District of Columbia and Puerto Rico.
The announcement comes as enrollments overall in the for-profit sector are declining after years of rapid growth, even as enrollment in other sectors of higher education rises. Recent federal figures showed enrollment in for-profits fell 2.9 percent in 2011. The sector has faced tighter regulations and more pressure to enroll students who have a better chance of graduating.
Another factor in the closures: students increasingly favor online courses.
University of Phoenix recently announced a tuition freeze in hopes that will help it retain students and woo others put off by rising education costs.
"People are simply holding off investing money in education at a time when the costs are escalating and the outcomes are uncertain," Pepicello said.
In the June-to-August quarter, the number of students enrolled in degreed programs at University of Phoenix fell on an annual basis by 13.8 percent to 328,400. While enrollment of new students in degreed programs declined 13.7 percent.
That decline led to an 11 percent drop in fiscal fourth-quarter revenue for the university's parent company, which helped weigh down earnings despite some changes in tuition prices and other fees.
Apollo reported net income of $75.4 million, or 66 cents per share, for the three months ended Aug. 31. That compares with net income of $188.6 million, or $1.37 per share, a year earlier.
The latest results included $9.4 million in restructuring costs and other charges. Excluding the special items, Apollo's earnings amounted to 52 cents per share.
Revenue fell to $996.5 million from $1.12 billion.
Analysts on average expected adjusted earnings of 50 cents per share on $1.01 billion in revenue, according to FactSet.
For the full fiscal year, Apollo's net income slid to $422.7 million, or $3.45 per share, compared with net income of $572.4 million, or $4.04 per share, a year earlier. Revenue dropped to $4.25 billion from $4.71 billion the year before.
Apollo estimates that fiscal 2013 revenue will range from $3.65 billion to $3.8 billion. Analysts forecast $4.07 billion.
Shares of Apollo Group ended regular trading down 17 cents at $27.49. The stock fell $2.44 to $25.05 in extended trading. It's down nearly 49 percent so far this year.