Study Group: For-Profit Education Industry Experts

GLG News^SM Analyses by this Study Group's Leading Experts(?)

Wyndham – Hotel, Timeshare & Vacation Ownership Competitors Face Challenging 2008

January 16, 2008

Analysis by:Stephen Magrill, Adjunct Professor,

Analysis of:Wyndham shares tumble on profit outlook | www.reuters.com

Despite this mid December 2007 change in guidance; Wyndham should continue its leadership as the largest vacation ownership (VO) operator in 2008. Its more bargain hotel brands are likely to be more stable than its pricier competitors during any possible downturn.   Many of the lodging stocks have already been slashed as Marriott and Starwood delivered reduced 3rd QTR 2007 earnings. Analysts discounted the impact of reduced business travel, the concern is how will the VO divisions of Wyndham, Marriott, Starwood, Bluegreen, perform in ‘08.   Historically, (VO) is highly resilient during major economic recessions, but this slowdown is deeper and could impact upscale timeshare developers like Marriott, Starwood, Hilton, etc.     The WYN Group and Bluegreen should be less vulnerable in ’08 as they offer better price/value and/or sell VO in more drive to and mid market locations. Overall, VO operators should be less impacted in ‘08 than the overall hotel sector.

Sunterra – Is there Light at the End of the Tunnel?

March 30, 2007

Analysis by:Stephen Magrill, Adjunct Professor,

Analysis of:Diamond Resorts to Acquire Sunterra for $16.00 per Share in Cash Creating Leading Vacation Ownership Company | biz.yahoo.com

The big conversation piece at this years ARDA convention which took place in Orlando, March 25-29 was the acquisition of Sunterra by Diamond resorts which was announced on March 12, 2007. The industry remains strong, but can Sunterra succeed with its new leadership in an intensely competitive field.

Few pure timeshare companies will remain once Sunterra goes private. Many analysts benchmarked Sunterra’s financial data to help evaluate other timeshare operators. The only public timeshare players left in the industry are: Bluegreen (BXG) 80% timeshare, 20% land sales and two small niche operators, Silverleaf (SVLF) and ILX Resorts, Inc. (ILX). They are not large enough to provide meaningful trend line information.

From a public information standpoint we can only rely on the minimal disclosure from the major hotel brands and vacation exchange companies. On an annual basis PricewaterhouseCoopers provides an excellent timeshare financial benchmark study.
Can Cloobeck who has had somewhat of a litigious past (I’m sure he justified these legal actions for this deal) and essentially ran a family owned timeshare operation rise to the challenge in rebuilding Sunterra? An interesting fact is that Cloobeck apparently has an $8 million buyout clause if his leadership is no longer warranted.

 

The University of Phoenix – On the Right Track Again Toward Graduation

March 26, 2007

Analysis by:Stephen Magrill, Adjunct Professor,

Analysis of:Apollo Group, Inc. Reports Fiscal 2007 First Quarter Unaudited Financial Results | phx.corporate-ir.net

This fiscal first-quarter report issued on Feb. 7, 2007 from Apollo Group. Inc., the for profit educational provider that runs the University of Phoenix (UOP) appears to represent a key turning point for an improved outlook with most analysts. The University of Phoenix, with more than 300,000 students at some 160 learning centers and 100 campuses (including an online campus) is the US’s largest private university. With fears subsiding regarding competition, earnings restatements and an investigation into options backdating, Apollo Group (APOL) is up a healthy 17% year to date through March 22.

Once a glamour stock in the for profit educational sector, peaking at $94 a share in 2004, Apollo has faced a seemingly endless list of challenges in the past few years including the strength of its senior management team, accounting irregularities, the options back dating, changing demographics of adult students, the law of big numbers (can it continue to grow at its strong historical growth rates), questions relating to its strategic direction, federal financial aid issues, and even calculations of its graduation rates, etc.

Analysts seemed mostly impressed with this quarterly report and senior management statements about its future despite the fact that the report itself was unaudited. Apollo was upgraded by Thomson Financial – Gradient, and; Columbine Capital Services; Argus (Buy), Morningstar (Buy), Morgan Stanley (“we remain bullish”), S&P (Sell). Apollo expects to file the audited statement for the first quarter of 2007, third quarter of 2006, and its report for the 2006 fiscal years by April 30. See commentary section below for short and long term outlook; key positives and challenges.

How will the new CEO impact DeVry?

November 24, 2006

Analysis by:Martin Grossman, Consultant,

Analysis of:DeVry Names New President and CEO | biz.yahoo.com

Will Hamburger stay the course?

Will Taylor be second guessing Hamburger?

How will the rank and file deal with the change at the top?

Where does CECO go from here?

November 22, 2006

Analysis by:Martin Grossman, Consultant,

Analysis of:Career Education quarterly profit falls 62 percent | today.reuters.com

CECO continues to struggle as earnings decline, total enrollment sinks and student starts go in wrong direction.

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