Apollo Group Inc., owner of the largest for-profit college in the United States, said it will cut about 800 jobs and shut down half its campuses to save costs amid declining profit and lower student enrollments.
The parent company of the University of Phoenix forecast a weak 2013 and said it expects to cut costs by $300 million by fiscal year 2014.
Apollo's shares, which have nearly halved in value since the beginning of this year, fell about 8 percent after the bell to $25.35.
The market leader's action is yet another sign that a recovery in the for-profit education industry is far away.
The industry has struggled to attract students ever since a U.S. government scrutiny revealed high student debt loads and low graduation rates.
New federal rules that threatened to cut away financial aid if debt loads remained high were introduced in 2011, forcing colleges to change the way they enrolled students and focus more on the quality of education.
Apollo's student sign-ups tumbled over 40 percent in 2011. They grew for two quarters in 2012 but declined again for another two. Sign-ups fell 14 percent for the fourth quarter ended August 31.
For 2013, Apollo forecast operating income of between $525 million and $575 million, excluding items, and revenue of between $3.65 billion and $3.80 billion.
Analysts were looking for a profit of $3.13 per share, on revenue of $4.07 billion, according to Thomson Reuters I/B/E/S.
The company has taken several steps over the last year to better position itself in the highly competitive market for quality students – those who would be able to pay back debt.
It has offered trial programs for its students, changed its marketing strategy and last week implemented a tuition freeze.
Apollo on Tuesday said it would shut 115 campuses, which will impact about 4 percent of total enrollment, or about 13,000 students.
It expects to incur about $175 million of restructuring and other charges, primarily from lease exit and other related costs.
Apollo is also buying back private equity firm Carlyle Group's <CG.O> 14.4 percent stake in their joint venture, Apollo Global, for $42.5 million, the company said in a regulatory filing.
Net income fell to $74.2 million, or 66 cents per share, in the fourth quarter, from $183.9 million, or $1.37 per share, a year earlier.
Excluding items, the company earned 52 cents per share. Revenue fell 11 percent to $996.5 million.
Analysts expected a profit of 49 cents per share on revenue of $1.01 billion.