Corinthian Colleges

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Corinthian Colleges

• Analyst Joe Strasser

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Overview

• Corinthian Colleges is a for-profit
  post-secondary education company.
• As of June 2004, it operated 88 colleges in 22
  states and 45 colleges (10 which are expected to
  close in 2005) and 15 corporate training centers
  in seven Canadian Provinces.
• The company offers a variety of masters,
  bachelors, and associates degrees and diploma
  programs through four operating divisions in the
  U.S. and one in Canada.
• Company Objective To fulfill the ever-growing
  educational needs of individuals seeking to
  obtain relevant, career-training skills in a
  number of marketable fields.

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School Divisions

• Corinthian Schools, Inc. (CSI)
• Operated 43 primarily diploma granting schools
  that focused mainly in healthcare, business,
  electronics and information technology.
• Titan Schools, Inc. (TSI)
• Operated 14 campuses that offered diploma and
  degree programs in aircraft frame and power plant
  maintenance, technology and automotive repair and
  diesel repair.

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School Divisions Cont.

• Rhodes Colleges, Inc. (RCI)
• Operated 17 primarily degree colleges in
  healthcare, business, criminal justice,
  information technology and electronics.
• University Division
• Operated 14 degree colleges that had a main focus
  in healthcare, business, criminal justice,
  information technology and electronics.

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School Divisions Cont.

• CDI Education Corporation Post-Secondary
  Education Division (CDI-PS)
• Operated 45 Colleges in Canada that offered
  diplomas in allied health, business and
  information technology.
• CDI Education Corporation Corporate Education
  Division (CDI-CE)
• Operated 15 Corporate training centers in Canada,
  which provided onsite, outsourcing and e-learning
  services in the corporate market in the areas of
  skills development, management for business and
  technology professionals.

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Operating Strategy

• Focusing on Attractive Markets (Eliminating Guess
  Work)
• Establish a strong position in new and expanding
  markets by creating additional campuses in areas
  with good growth and employment opportunities.
• Offer up-to-date programs that are that are
  relevant to economic and demographic trends.
• Centralizing Key Functions (Distribution of
  Authority
• Establish a management team that effectively
  distributes responsibility and tasks evenly.
• Focus on Student Success (Its All About
  Results!)
• Offer a variety of services such as tutoring to
  provide students with support throughout their
  educational experience.

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Growth Strategy

• Opened six new branches in the U.S. in 2003 and
  were hoping to open six more this year.
• In 2003, increased capacity by expanding,
  enlarging and relocating 20 existing facilities.
• Adopted 50 new programs in their existing
  schools.
• Online learning has steadily increased.

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Competitors (MKT Cap)

• Apollo Group, Inc. 13.34B
• ITT Educational Services 1.73B
• Devry Inc. 1.00B
• Corinthian Colleges 1.24B
• Apollo Group also has more employees, revenue
  and net income than Corinthian Colleges.
• COCO also competes with public and private
  non-profit institutions . The tuition charged by
  public institutions is generally less than COCO
  because state subsidies, donations and government
  research. Tuition for private institutions is
  generally higher than COCO.

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(No Transcript)
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Executive Officers

• David G. Moore (65) Chairman of Board CEO
• Dennis L. Devereux (57) Executive Vice President
  Administrative Services
• Dennis N. Beal (53) Executive Vice President
  CFO
• Beth A. Wilson (52) Executive Vice President
  Operations
• William B. Buchanan (38) Executive Vice
  President Marketing

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Strengths

• One of the largest for-profit, post-secondary
  educational companies.
• Serves the large and growing segment of the
  population seeking to acquire career-oriented
  education.
• Offers a variety of degree and diploma programs
  throughout its many divisions.

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Weaknesses

• Strong competition in the school industry.
• Making sure to follow the tight regulation
  requirements set forth by the states.
• Majority of their revenue (81) is collected on a
  cash basis from federal student financial aid
  programs. If the regulations are not met then
  COCO does not receive any money.

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Opportunities

• Expansion into new markets by increasing the
  number of programs offered.
• Produce well-trained students that will become a
  good marketing tool for the company.

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Threats

• The competition taking the market share from
  COCO.
• Better technology and facilities.
• People not being attracted to an advanced degree
  due to bad economic conditions.

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Analysts Opinion

• On September 14, 2004 Banc of America chose to
  downgrade from a buy to a neutral position.
• On August 3, 2004 Jefferies and Co. upgraded the
  stock from an under perform to a buy.
• On August 2, 2004 JP Morgan, Harris Nesbitt,
  Merrill Lynch and Bear Streams all chose to
  downgrade COCO stock.
• Out of 14 analysts 10 chose to hold, 2 chose to
  buy, 1 chose strong buy and 1 chose sell.

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Cross-Examining CorinthianBy Rich Smith
(10/22/04)

• Over the past month the stock price has declined
  3.6 over the past month and COCO has already
  given back 1/3 of its gains collected in 2004
  fiscal year.
• In its fiscal first quarter COCO posted a 36
  revenue rise with a 6 earnings decline.
• The reason for this was because COCO underwent a
  massive expansion in order to keep up with its
  competitors. It acquired 72 less profitable
  colleges and training centers and is now trying
  to turn them around. COCO characterizes its
  expansion as investment in future growth and
  understands that it will take some time to turn
  its new acquisitions around.
• The expansion has dropped COCOs net margin from
  last years 11.5 to 7.9.

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Recommendation

• COCO has had a 52 week price that ranged from a
  low of 9.99 to a high of 36.19.
• We purchased 34 shares at 31.39, which gave us a
  total investment of 1067.26. Currently the
  stock price is 13.71, which means we lost
  601.12 (56) of what we initially invested.
• Based on our criteria COCO has outperformed a
  majority of our ratios so I would suggest that we
  hold the shares that we have.
• We do not have a lot of money in this stock so I
  do not think that we have much to lose if we hold
  on to it.