Capella Education Company (CPLA) was founded in 1991 in Minnesota as an education institution targeting working adults. By 1993 the company was offering doctoral and master's degrees through distance learning programs, and by 1995 CPLA had begun offering their courses through the internet. From 1998 through to today, CPLA expanded their offerings significantly to the point where they now offer 43 academic programs with 136 specializations. In 2006 the company listed on the NASDAQ.
CPLA serves around 39,000 students targeting primarily working adults. 80% of CPLA's students are enrolled in a masters or doctoral degree program, and all courses are offered online.
CPLA's performance for the 6 months to June 2011 was on track to meet its excellent 2010 performance, but is expected to drop off slightly in the 2nd half of 2011 and into 2012. Though re-enrolments are strong, the company is starting to experience a drop off in new enrollments. CPLA demonstrates some characteristics of each of a cyclical, countercyclical, and non-cyclical business. When the economy is strong, people see their peers gain career advancement, as so engage in further education to do the same. And when the economy is weak, people look to further educate themselves in the hope of improving their situation.
What we are seeing currently is a perceived lack of bright prospects for American employees in general, and people will not make the effort to further educate themselves if they do not see career advancement at the other end. This is having a material impact on CPLA's performance for 2011, and it will continue until the general economy picks up and the unemployment rate decreases. All education companies are experiencing a challenging 2011. Perhaps the well-publicized regulatory uncertainty surrounding the education industry is keeping students away also.
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