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Bridgepoint Education To Produce Its Own Online Texts

By Melissa Korn Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Bridgepoint Education Inc. (BPI) is taking control of its school bookstore, bringing it inhouse and online to better control content and boost revenue. The for-profit college, whose student base is 99% online, is launching a suite of Web-based course materials for general education classes this spring, with more discipline-specific e-texts coming in the next two years. While Bridgepoint is touting the program, called Constellation, as an opportunity for students to save cash as they avoid markups from third-party sellers, the school also expects to make money on the venture as it sidesteps fees paid to outside vendors. "The potential impact on earnings from this simple change is enormous," Trace Urdan, an analyst with Signal Hill Capital Group, wrote in a note to analysts. Bridgepoint doesn't expect to see any gain this year, as it subsidizes some books for students. But with 30% of students using the inhouse texts in 2011, and 75%-80% by 2012, the school will have a large revenue stream. Prior to this move, Bridgepoint used textbooks from third parties, but now many of the e-texts will be authored by school faculty and consultants. Bridgepoint wouldn't provide specific revenue projections, but Chief Financial Officer Daniel Devine said he expects Constellation to have a "favorable" margin impact. The company has never recognized textbook revenue. Urdan believes Bridgepoint stands to add as much as 75 cents to $1 in incremental per-share earnings in fiscal 2012. Bridgepoint's 2009 earnings totaled $1.26 a share, excluding items. Bridgepoint isn't the only school innovating online, though its moves will have the most direct financial impact. Other for-profit colleges are beefing up their student support services to help boost student persistence, a metric that came under fire after enrollments grew quickly in the last few years but graduation rates didn't. While schools are taking a variety of steps online to improve student retention, the activities generally relate to forging a campus feel. "That sense of community, it's central to shoring up the value proposition," said Urdan. It can become especially important as more ground-based campuses with well-developed social networks venture online. Grand Canyon Education Inc. (LOPE), for example, is in the process of adding tools that allow students to see which of their classmates are online, according to Chief Information Officer Joe Mildenhall. Apollo Group Inc. (APOL) is bolstering its networking capabilities so a University of Phoenix student who doesn't have any classmates online at 4 a.m. can find someone from a different section of the same course to help with a tough statistics problem. "A lot of times, online classes can be alienating," said Amy Junker, a senior analyst with Robert W. Baird & Co. Students need the "feeling that someone is there to help you." Co-Chief Executive Gregory Cappelli said Apollo is spending "hundreds of millions" of dollars on technology, though Apollo declined to provide further details on expenditures. Still, it's not enough to create online study groups. As competition heats up online, with more schools offering hybrid online/offline courses, for-profit schools are stepping up their customer service offerings. Capella Education Co. (CPLA) last month officially released its new student portal, providing alerts for financial aid deadlines, updates on when professors issue grades and an easy-to-access degree completion plan showing a student's progress toward graduation. "You can't walk down the hall to the registrar when you're sitting in your underwear at night," said Jeffrey Silber of BMO Capital, explaining the need for making such services accessible online. "You have to do a lot of hand-holding for online students." -By Melissa Korn, Dow Jones Newswires; 212-416-2271;

Stock News for Capella Education Company (CPLA)
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