Santa Ana-based Corinthian Colleges Inc.’s shares plummeted 30% Tuesday after it said it expects lower earnings as lenders cut private loans to students who present higher credit risks.
The for-profit education provider expects its earnings for the 12 months through June to be less than the $33.9 million to $38.2 million it earlier expected after Sallie Mae and two other lenders said they no longer would offer loans to subprime student borrowers.
Analysts had expected the company to report earnings of about $36.5 million.
The company reported earnings of $33.9 million for the 12 months through June 2007.
Corinthian’s announcement comes as turmoil in the credit market continues to linger as a result of last year’s subprime mortgage meltdown and weak housing market.
Corinthian, which has a market value of about $1.4 billion, operates more than 100 schools nationwide and in Canada that offer degrees and certificates in healthcare, business, technology and other areas.
The company has had more than a two-year slump with falling enrollment, lower profits and setbacks in a program designed to get more students to its schools.
Since 2004, there have been lawsuits from students and shareholders, government probes in California and Florida and a stock option grant review.
Federal investigators raided a Florida campus in October, according to a company filing with the Securities and Exchange Commission and newspaper reports.
Officials from the federal Education Department and local agencies served warrants on Corinthian’s National School of Technology in Fort Lauderdale.
In December, the company announced that it would sell 12 of its Canadian schools to Eminata Group, a Canadian operator of vocational schools for $7.4 million. The sale is expected to close by June.
Analysts in the past have said the company’s “countercyclical” nature could spur gains as the economy cools.
Historically, the biggest jumps in for-profit enrollment come amid economic slowdowns, analysts say. The biggest drops followed strong economic growth, as seen in the past few years.
