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Corinthian Colleges Beats Forecast

Guidance is on the soft side.
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Third-quarter earnings slid 32% from a year ago at

Corinthian Colleges


as the for-profit education purveyor spent more on professors, classrooms and marketing.

Corinthian earned $14.7 million, or 17 cents a share, including 2 cents of stock-options expense, in the quarter, compared with $21.6 million, or 23 cents a share, a year ago. Analysts surveyed by Thomson First Call were expecting earnings of 16 cents a share in the latest quarter, on average.

Third-quarter sales were $250.3 million, down from $252.8 million and missing the Wall Street consensus estimate of $251.6 million. Corinthian said its total student population was 69,403 in the latest period, down from 72,383 a year ago. Total student starts fell to 24,647 from 25,985.

On the expense side, the cost of educational services rose 2% to $137.3 million, or 54.9% of revenue, in the latest quarter, while the cost of marketing and admissions rose 19% to $25.3 million, or 26.3% of revenue.

The higher educational expense was mainly the result of higher compensation and increased facility costs, partially offset by lower bad-debt expense, Corinthian said. The higher marketing expense reflected higher advertising, admission representative compensation, and lead processing technology costs, it said.

In the fourth quarter, Corinthian expects to earn 13 cents to 15 cents a share, including a penny a share of stock options expense. The Thomson First Call consensus for the period is for earnings of 15 cents a share.

Corinthian's stock closed at $14.97 Thursday. In premarket trading Friday, it lost 27 cents, or 1.8%, to $14.70.