Corinthian Colleges Cuts Earnings Forecast

Corinthian Colleges Inc., one of the largest for-profit operators of trade and technical colleges in the U.S., cut its fiscal fourth-quarter earnings forecast Thursday because it enrolled fewer new students than expected. The company’s shares fell more than 17%.

Profit in the quarter that ends Thursday will be 13 cents a share, excluding some one-time items, Santa Ana-based Corinthian said in a statement.

The company had forecast earnings of 20 cents to 22 cents. Wall Street had expected a profit of 21 cents, the average estimate of 13 analysts surveyed by Thomson First Call.

The company earned 20 cents a year earlier.

Chief Executive Jack Massimino said new admissions workers hadn’t been productive enough and that the company had been doing a poor job pursuing prospective student leads from the Internet. But he said the company recently had improved its training and was using better methods of processing leads.

“We began implementing most of these improvements in April 2005, and we believe it will take several quarters to complete implementation and begin to see the benefit of our efforts,” Massimino said in the statement.

Corinthian shares fell $2.80 to $13.39 on heavy volume. Before Thursday, the shares had fallen 14% this year.

Analyst Gregory Cappelli of Credit Suisse First Boston downgraded his rating on Corinthian’s stock to “neutral” from “outperform.”

Although Corinthian “is taking what we believe are reasonable steps to improve these issues, it is early in the process and increasingly difficult to predict the timing of a turnaround,” Cappelli wrote to investors.

Michael Jaffe, an analyst with Standard & Poor’s, cut his fiscal 2005 per-share earnings estimate for Corinthian to 79 cents from 88 cents.

“We think these execution issues are evidence of what we see as a higher-than-average risk profile for COCO,” Jaffe said in a note.

“However,” he added, “we think the issues are largely priced into the stock.”