New Oriental stock falls on quarterly revenue view
Tue Jan 15, 2008 1:31pm EST
(Recasts; adds stock activity, details on outlook)
NEW YORK, Jan 15 (Reuters) - China's New Oriental Education & Technology Group Inc (EDU.N:
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Research) said on Tuesday that quarterly revenue growth would be challenging, sending its shares down as much as 31 percent.
The provider of private education services forecast revenue growth of 22 percent to 28 percent for the third quarter ending on Feb. 29. Revenue increased 51 percent in the year-earlier period, when the timing of the Chinese New Year resulted in an extended winter break that allowed students more time to take language-training and test-preparation courses.
In addition, New Oriental said many schools throughout China had decided to shorten this year's winter break by a week or more to extend the summer recess for the Beijing Olympics.
"The reality is that no one will be going to classes when the Olympics is on, and ad rates have been going up and up and up," said analyst Trace Urdan of investment firm Signal Hill.
Inflation resulting from the games could also raise employee wages, Urdan said. "There's a lot of short-term pressure."
In its second-quarter profit report released early on Tuesday, the Beijing-based company said it expected third-quarter revenue of 311.2 million yuan ($42.1 million) to 326.5 million yuan ($44.2 million). According to Reuters Estimates, analysts were expecting $44.1 million for the period.
New Oriental also reported second-quarter profit of US5 cents per share, compared with the analysts' average estimate of US7 cents.
The results were in line with Signal Hill's estimate for 5 cents per share, including costs from stock-based compensation.
New Oriental shares were down $21.86, or 27 percent, at $59.05 in afternoon New York Stock Exchange trade after falling as low as $56.02 earlier in the session.
Shares of another Chinese educational company, Noah Education Holdings Ltd (NED.N:
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Research), were down 54 cents, or 7.5 percent, at $6.66. (Reporting by Chelsea Emery and Ritsuko Ando; Editing by Lisa Von Ahn)
