University of Phoenix Lays Off 700 Employees

The Apollo Group on Monday laid off roughly 700 University of Phoenix employees as it grapples with declining enrollment and changes in the way it pays admissions counselors.

The layoffs, mainly affecting admissions personnel, were announced in meetings with affected employees across the nation, including the Valley, said Apollo spokesman Ryan Rauzon.

He did not specify how many of the firm’s Arizona workers were let go.

The Phoenix-based company expects new-student enrollment to drop roughly 40 percent in the current quarter, which ends today, as it significantly alters its recruiting practices to focus on students with a better chance of earning degrees.

The new emphasis includes a free, mandatory three-week orientation program for those with limited college experience. This effort, plus changes in the way Apollo pays admissions counselors – so that they’re not compensated based on enrollment numbers – has been driven by closer federal scrutiny of the for-profit education industry.

Those and other moves have prompted an enrollment decline the company hopes is temporary.

"Over time, we believe these steps will improve students’ ability to complete their degrees and position the company for quality long-term growth," Rauzon said.

Employees affected by the layoffs will receive "fair and competitive" severance packages, he said, without elaborating on the packages.

The nation’s largest for-profit education company last week confirmed that roughly 20 positions were cut in its creative-services department, which markets the university to prospective students.

Apollo said it expects to incur charges of approximately $5 million in the current quarter in connection with the layoffs, to be followed by reduced compensation expenses of roughly $8 million a quarter, starting in the quarter that begins next month.

"The personnel reductions are designed to streamline our operations and to better align our operations with our business strategy, refined business model and outlook," Apollo reported in a statement filed with the Securities and Exchange Commission.

The layoffs were announced after the stock market closed. Apollo stock ended the day down 16 cents a share at $34.30 in light trading. Apollo shares are trading near the low point of their 52-week price range between $66.69 and $33.80.

The company earlier warned that it expects the current fiscal year, which began Sept. 1, to be one of "continuing transition" as it seeks to reduce the number of dropouts by recruiting more experienced students with a greater likelihood of succeeding in its programs. As noted, Apollo also is changing the roles and compensation packages for its admissions personnel, and it’s facing other challenges including greater regulatory and media scrutiny.

Apollo has warned that these and other initiatives will hurt its operations and financial results.

The company reported net income of $41 million, or 28 cents a share, on revenue of $1.26 billion in its fiscal fourth quarter ending Aug. 31. That was down from a profit of $91.5 million, or 59 cents a share, on revenue of $1.07 billion one year earlier.

Apollo counted 470,800 students at that time within the University of Phoenix and other education subsidiaries.


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