NEWS: Strayer Education Inc. shares plunged Thursday after the for-profit education company reported that its net income fell 17 percent on a drop in enrollment. It also said it would cut its workforce by 20 percent and close 20 physical schools, further lowering its enrollment.
DETAILS: The company, which also provides classes online, said it would shut down primarily schools in the Midwest. That will affect about 5 percent of its students, who will be able to continue classes online. Strayer University's enrollments fell 17 percent to 43,192 for the fall term. Student levels have been dropping throughout the industry due to tougher regulations and the weak recovery.
The company said cost cuts will save about $50 million annually beginning in 2014. It expects to take a $45 million to $55 million charge in its fourth quarter related to the moves.
NUMBERS: Net income fell to $3.1 million, or 30 cents per share, for the quarter that ended on Sept. 30. That's down from $4.1 million, or 36 cents per share, in the same quarter last year. Revenue fell 11 percent to $110 million, largely due to lower enrollment.
FUTURE: Strayer did not issue formal guidance but said that its board has approved a 20 percent reduction in tuition for new undergraduate students, which it further expects will hurt its revenue per student for 2014.
STOCK: Shares of the Herndon, Va., company fell $9.84, or 20 percent, to $39.42. The stock has lost about 30 percent of its value this year.