Archipelago Learning's $106M IPO Planned This Week

TALI ARBEL

NEW YORK (AP) — When Archipelago Learning Inc. goes public this week, investors will weigh the strong growth in the educational programs provider's products against shrinking budgets at public K-12 schools.

The Dallas company, which provides Web-based educational testing and study aids to students in kindergarten through 12th grade, will start trading later this week in an IPO worth as much as $106.3 million, or more if underwriters exercise their overallotment options.

Archipelago's primary focus on students in elementary and middle schools is a unique investment opportunity in the online education sector, which is "getting quite crowded," according to Scott Sweet of IPOBoutique. It's the third education services IPO this year. The other two focused on college students, as do most publicly traded education companies.

However, shares of similar online learning-tools companies that sell to K-12 students, such as K12 Inc., have been choppy this fall. Cash-strapped state and local governments are cutting funding to Archipelago's biggest customers, public schools. They may continue to do so as the weak economy hits tax revenue.

"If there are going to be continued cutbacks, that does represent a potential problem," said IPOfinancial president David Menlow.