MAXIDIGM INVESTMENT CLUB
STOCK ANALYSIS
Learning
SECTOR



Pure E-Learning
Traditional Education – Higher
Learning
Others
What is E-Learning






Vs. Traditional training
 By third-party vendor on training department
 Time-consuming
 Costly (travel, accommodation – 2/3 of total costs)
Computer based training (CBT)
Web-based
Deployed to mass users
Cost advantage
Anywhere, anytime, anything!
Industry Outlook
Corporate Training







Total corporate training market $66 billion
Traditional training still account for about 80-90%
$3.5 billion spent in 2000, growing to $25 billion in 2003
Constantly evolving
Highly competitive and fragmented
Competition from publisher, software vendor
Acceptance and effectiveness of training
Traditional Education – higher Learning




U.S. Dept of Education estimated $200 billion
Growth in enrollment to continue
25 years and older, part-timers, female
Demand from changing Technology
Stock Selection
Age > 6 mths?
(> 4 mths)
P/E Ratio
y
y
y
y
y
y
N/A 2000
N/A
N/A
N/A
N/A
N/A
N/A
1.66 b
585.6 m
573.8 m
214 m
165.1 m
33.1 m
11.5 m
529 k
447.8 k
336.1 k
49 k
68.9 k
351.8 k
54.8 k
Rising sales/ falling Earnings
Rising sales
Rose significantly in 2000
Rising
Rising slowly
Slowed in 1999
2000 fell from 1999
Traditional Education - higher learning
APOL
Apollo Group
DV
DeVry
ltre
Learning Tree
edmc
Education Mgt Corp
coco
Corinthian Colleges
ceco
Career Education Corp
esi
ITT Education Services
y
y
y
Y
y
y
y
45.37
50.58
27.12
38.51
43.75
35.106
24.345
3.728 b
2.51 b
980 m
860 m
679 m
670 m
499.7 m
1.01 m
243.7 k
235.5 k
285.8 k
145.6 k
169.3 k
126.5 k
Rising
Rising
Rose significantly in 2000
Rising
Rose significantly in 2000
Rising
Rising
Traditional Education - K to 12
edsn
Edison Schools
y
N/A
1.46 b
250.8 k
Rising
Publisher/Schools
schl
Scholastic Corp
y
21.567
1.55 b
155.6 k
Rising
Pure E-Learnings
SMTF
Smartforce
DTHK
DigitalThink
SABA
Saba Software
SKIL
SkillSoft Corp
CLKS
Click2learn.com
LTWO
Learn2.com
VCMP
Vcampus
asis
ASI Solution
Canadian Companies
cty-tse or ctynf
itk-tse
Mkt Cap
Avg Trading 3-mth Volume Sales/Earnings Trend
(> $100 m?)
(> 10,000 shares/day?)
(Falling or Rising?)
Impact of slowdown…


Reduction in training budget?
Higher demand for skills
improvement?
SmartForce PLC - SMTF




Incorporated in Ireland 1989
Largest and only profitable company
Comprehensive offerings – more than 1300 courses
IT, business skills, project management, core competencies
Customers


Fortune 3000 and major international companies
Alcatel, Lucent, MCI, British Airways, Chase Manhattan … (2500)
Revenue Stream



Prior to 2000, license software
2000 – internet rental model (ASP) ; hence income has been
deferred
No single customer account for 5 %
SMTF
GROWTH RATES
1 Year
Sales %
SMTF
3 Years
5 Years
-14.95
7.07
24.87
EPS %
NM
NM
NM
Dividend %
NM
NM
NM
REVENUE
Quarters
1997
1998
1999
2000
MAR
26,727
39,929
40,197
28,534
JUN
29,755
44,852
47,247
36,393
SEP
35,136
35,182
50,188
45,572
DEC
45,429
42,269
60,122
57,699
137,047
162,232
197,754
168,198
Totals
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1997
1998
1999
2000
MAR
0.04
0.16
0.03
-0.23
JUN
0.05
0.09
-0.01
-0.19
SEP
0.11
0.06
0.11
-0.1
DEC
0.22
0.05
0.15
-0.03
0.42
0.36
0.28
-0.55
Totals
Saba Software - SABA




Founded in 1997
Tool to ‘manage’ learning
Launched B2B SABA Learning exchange in 1999
Leading provider of “human capital development” & mgt solutions
Customers


Large businesses, governments and Learning providers
Cisco, 3Com, Continental Airlines, Lucent, P & G
Revenue Stream




Mostly from license fees, implementation and consulting
Transaction-based revenue from B2B marketplace still insignificant
No single customer account for 10 %
Profitability 2002?
SABA
GROWTH RATES
1 Year
SABA
3 Years
5 Years
Sales %
827.9
NA
NM
EPS %
NM
NA
NM
Dividend %
NM
NA
NM
REVENUE
Quarters
1999
2000
2001
AUG
156
1,707
10,048
NOV
327
3,497
13,023
FEB
554
5,202
MAY
902
7,586
1,939
17,992
Totals
23,071
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1999
2000
2001
AUG
-0.04
-0.63
-0.46
NOV
-0.16
-0.63
-0.43
FEB
-0.19
-0.46
MAY
-0.45
-0.53
-0.84
-2.25
Totals
-0.89
Note: Units in U.S. Dollars
Digital Think - DTHK




Founded in 1996, revenue 1999
Focus is custom-tailored courses (62%)
More than 350 courses
Partnership with EDS
Customers


260
Adobe, Siebel, Deutsche Bank, KPMG, Schwab
Revenue Stream




Software licenses, development fees
Profit sharing with customers from “Extended Enterprise”
50% of 2000 revenue from 6 customers!
Profitability 2002?
DTHK
GROWTH RATES
1 Year
Sales %
DTHK
3 Years
5 Years
485.54
656.3
NM
EPS %
NM
NM
NM
Dividend %
NM
NM
NM
REVENUE
Quarters
1999
2000
2001
JUN
283
1,174
6,262
SEP
406
2,136
8,760
DEC
468
3,178
MAR
690
4,327
1,847
10,815
Totals
15,022
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1999
2000
2001
JUN
-0.28
-0.57
-0.23
SEP
-0.31
-0.92
-0.68
DEC
-0.87
-2.86
-2.26
-4.94
Totals
-0.91
SkillSoft Corp - SKIL

Leading provider of critical business skills (professional development)
380 courses
World’s largest e-learning library for Project Management
First company to be certified by PMI (PM Institute)
Reseller arrangements with other learning agencies

Main customer is GTE (25% of revenue)




SKIL
GROWTH RATES
1 Year
SKIL
3 Years
5 Years
Sales %
-100
NA
NM
EPS %
NM
NA
NM
Dividend %
NM
NA
NM
REVENUE
Quarters
1999
2000
2001
APR
0
198
2,114
JUL
0
890
3,639
OCT
0
1,283
5,511
JAN
0
1,820
Totals
0
4,191
11,264
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1999
2000
2001
APR
0
-2.4
-0.57
JUL
0
-1.9
-0.47
OCT
-3.33
-4.23
-0.4
JAN
-2.35
-3.22
-5.68
-11.75
Totals
-1.44
Apollo Group - APOL

Largest private institution for higher learning, around for 25 years
University of Phoenix, Western International University, Institute of
Professional Development, Financial Planning Inst.
Launched online Learning via U. of Phoenix
More than 50 campuses and 100 learning centres
100,000 enrollments
90 % job placement rate
55% rentention rate
6% student-loan default rate

40% revenue from Europe – exposed to currency exchange risk







APOL
GROWTH RATES
1 Year
APOL
3 Years
5 Years
Sales %
22.28
29.76
30.53
EPS %
24.03
29.38
38.39
NM
NM
NM
Dividend %
REVENUE
Quarters
1998
1999
2000
2001
NOV
87,875
115,698
143,418
FEB
85,078
109,356
133,980
MAY
105,201
138,107
167,591
AUG
106,723
135,685
165,008
384,877
498,846
609,997
Totals
177,073
177,073
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1998
1999
2000
2001
NOV
0.13
0.17
0.22
FEB
0.1
0.13
0.16
MAY
0.2
0.24
0.28
AUG
0.16
0.21
0.28
0.59
0.75
0.94
Totals
0.32
0.32
DeVry - DV







One of the largest publicly held higher education institute
Founded 70 years ago
DeVry University, Denver Technical College, Keller Institute of
Management, Becker Conviser Review (CPA, CMA, CFA)
300 locations
80,000 enrollments
Recently partnered with eCollege to develop e-learning
Fiscal 2001 is 10th consecutive year of annual earnings growth >=
20%
DV
GROWTH RATES
1 Year
DV
3 Years
5 Years
Sales %
20.49
18.02
17.26
EPS %
23.23
24.13
24.94
NM
NM
NM
Dividend %
REVENUE
Quarters
1998
1999
2000
2001
SEP
80,421
93,858
118,282
135,419
DEC
90,342
107,813
133,248
150,365*
MAR
92,854
110,234
130,132
JUN
89,854
108,730
125,162
353,471
420,635
506,824
Totals
285,784*
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1998
1999
2000
2001
SEP
0.09
0.11
0.14
0.17
DEC
0.12
0.15
0.18
0.220*
MAR
0.12
0.15
0.19
JUN
0.11
0.14
0.17
0.44
0.55
0.68
Totals
0.390*
Learning Tree - LTRE






Worldwide provider of training for IT professionals
Corporate clients and governments
Broad base of instructor-led courses
Custom-designed courses for larger clients
CBT offerings on CD-Rom up until 1999 (wrote off $1.2 mil in 1999)
Shifting to e-learning in 2000
LTRE
GROWTH RATES
1 Year
LTRE
3 Years
5 Years
Sales %
18.32
10.85
23.23
EPS %
190.65
51.39
34.1
NM
NM
NM
Dividend %
REVENUE
Quarters
1997
1998
1999
2000
DEC
36,010
45,179
45,152
49,399
MAR
35,759
45,005
46,520
52,997
JUN
43,881
47,946
49,129
63,024
SEP
48,833
49,044
48,520
58,588
164,483
187,174
189,321
224,008
Totals
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1997
1998
1999
2000
DEC
0.19
0.06
0.12
0.35
MAR
0.1
0.1
0.13
0.36
JUN
0.14
0.15
0.06
0.54
SEP
0.06
0.18
0.26
0.4
0.49
0.49
0.57
1.65
Totals
Edison Schools - EDSN





Largest private operator of public schools for K – 12 in U.S.
Contract with school boards; fund by pupil count
Assume operational and educational responsibilities
First 4 schools in 1995; now 113 in 21 states
Private schools principle – dramatic results
Risks





Private, for-profit public school – new area
Acceptance
Success depends on academic achievements
Lengthy sales cycle
Profitability 2004?
EDSN
GROWTH RATES
1 Year
EDSN
3 Years
5 Years
Sales %
69.16
79.92
108.99
EPS %
NM
NM
NM
Dividend %
NM
NM
NM
REVENUE
Quarters
1999
2000
2001
SEP
24,004
41,151
DEC
35,576
61,596
MAR
36,391
61,531
JUN
36,791
60,300
132,762
224,578
Totals
64,791
64,791
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1999
2000
2001
SEP
-1.37
-0.46
DEC
-0.99
-0.16
MAR
-1.02
-0.14
JUN
-4.75
-0.2
-8.13
-0.96
Totals
-0.43
-0.43
Scholastic Corp – SCHL






Global children’s publishing and media company
Children Books & magazines publishing (biggest chunk)
Educational publishing
Multimedia licensing and advertising
Website is most visited by teachers and schools
American rights to Pokemon, Harry Potter series
Risks



Changes in publishing industry
Changes in purchasing patterns
Competition from media, entertainment and publisher
SCHL
GROWTH RATES
1 Year
SCHL
3 Years
5 Years
Sales %
20.34
13.22
13.34
EPS %
33.94
397.32
4.38
NM
NM
NM
Dividend %
REVENUE
Quarters
1998
1999
2000
2001
AUG
166,600
150,200
182,500
362,100
NOV
354,800
403,200
511,300
668,300
FEB
239,000
267,300
312,800
MAY
298,000
334,000
395,900
1,058,400
1,154,700
1,402,500
Totals
1,030,400
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1998
1999
2000
2001
AUG
-0.405
-0.535
-0.715
-0.31
NOV
0.755
0.905
1.15
1.47
FEB
-0.095
0.005
0.055
0.41
0.635
0.775
0.665
1.01
1.265
MAY
Totals
1.16
ASI Solution - ASIS

Provide HR outsourcing for large corporations (Fortune 500)





Performance improvement
Employment Process outsourcing
Compensation & Market Share studies
Founded in 1978, public in 1997
1996 to 2000: revenue growth at a compounded rate of 55% from 10.6
mil to 79.1 mil
ASIS
GROWTH RATES
1 Year
ASIS
3 Years
5 Years
Sales %
20.53
56.33
55.05
EPS %
-11.81
9.4
32.8
NM
NM
NM
Dividend %
REVENUE
Quarters
1998
1999
2000
2001
JUN
6,700
12,013
15,899
23,087
SEP
5,905
14,844
15,239
17,901
DEC
9,385
18,058
20,252
MAR
12,876
14,738
20,512
34,866
59,653
71,902
Totals
40,988
Note: Units in Thousands of U.S. Dollars
EARNINGS P ER SHARE
Quarters
1998
1999
2000
2001
JUN
0.07
0.13
0.15
0.32
SEP
0.03
0.14
0.03
0.15
DEC
0.1
0.17
0.11
MAR
0.13
0.14
0.22
0.33
0.58
0.51
Totals
0.47
Quantitative Analysis
What the numbers say…
Technical Analysis
What the charts say…
Technical Analysis
Ind:E-Learning
BUY ?
MAYBE ?
Current
Price
Sym bol
6-m th
Return
1-Yr
Return
Support
Level 1
Support
Level 2
Sentim ent
Current P/E Buy, Sell,
vs. 52 w k
Hold
range
Signal
Pure E-Learning
1 SMTF
SmartForce PLC
$43.88
-8.59%
29.04%
43.00
37.00
Recovering
N/A in
2000
2 SABA
Saba Software
$16.38
-22.02% -42.54%
21.00
13.00
Recovering
N/A
Sell
3 DTHK
Digital Think
$15.00
-58.33% -62.50%
29.00
15.00
Bearish
N/A
Hold
$16.38
17.00%
18.00
15.00
Bearish
N/A
Hold
4 SKIL
SkillSoft
Traditional Education - Higher
Learning
-9.00%
Sell
1 APOL
Apollo Group
$51.50
90.74% 134.09%
35.00
25.00
Bullish
High End
Hold
2 DV
DeVry
$33.44
28.61%
85.76%
28.00
24.00
Wait & See
Nrear High
Hold
3 LTRE
Learning Tree
$46.25
-24.18%
92.71%
44.00
30.00
Recovery
Near Low
Hold
1 EDSN
Edison Schools
$33.94
47.55% 182.81%
31.00
22.00
Bullish
N/A
Sell
2 SCHL
Scholastic Corp
$43.44
40.12%
35.74%
30.00
24.00
Bullish
Near Low
Hold
3 ASIS
ASI Solution
$17.25
115.63% 245.00%
20.00
13.00
Bullish
Near High
Buy
Others