Capella to fire 125 as stocks fall and enrollment forecast plunges

Just got this from Bloomberg this morning:

Capella Education Co., a for-profit online-education company based in Minneapolis, fell as much as 15 percent in Nasdaq Stock Market trading after forecasting a 35 percent decline in new enrollments for the current quarter.

Capella also said it will fire 125 non-faculty employees, or 8 percent of its workforce, to save as much as $13 million a year. The job cuts will result in a $2 million charge in the first quarter, the company said in a statement today.

For-profit university revenue is being threatened by proposed regulations from the U.S. Department of Education that are slowing the growth of enrollments. Capella said total enrollments for the first quarter will grow 4.5 percent to 6.5 percent, less than the 7 percent estimate of Jeff Silber, an analyst with BMO Capital Markets Corp. in New York, who rates the shares “market perform.”

“We are now operating in an uncertain environment,” Kevin Gilligan, chairman and chief executive officer of Capella, said in the statement. “The current uncertainty is driven by weaker demand for higher education, regulatory uncertainty and increased competition.”

Capella fell $9.11, or 14 percent, to $54.23 at 11:02 a.m. in New York, after dropping to as low as $54. The shares have fallen 24 percent in the past 12 months.

Net income for the three months ended Dec. 31 grew 20 percent to $18 million, or $1.09 a share, Capella said in the statement. Revenue rose 21 percent to $114.7 million.