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6/4/02 – Recent months have not been kind to Edison Schools, the nation's leading private school management firm.
This spring, Philadelphia school officials hired Edison as its "lead district adviser" but disappointed company officials–and Wall Street–by awarding the firm only 20 schools to manage–far less than the 45 expected.
The company also came under scrutiny by the Securities and Exchange Commission (SEC), which last month concluded Edison "inaccurately described aspects of its business in SEC filings." According to The Boston Globe, Edison reported revenues for 1999 to 2002 that "were as much as 41 percent higher than the company actually generated"–a finding that's prompted several law firms to commence work on securities class action suits.
Also, last month, the Boston Renaissance Charter School, which has been managed by Edison since 1995, announced it would cut short its contract with the firm.
The spate of bad news has knocked down the value of Edison stock. It was trading May 30 for $1.16 a share–a significant drop from its one-time high of $36.75 in February 2001.
The company's troubles also have prompted some speculation about the company's viability. After years of growth, the company has yet to report a profit.
Company officials dismiss such speculation. In a press conference late last month, CEO Chris Whittle insisted the company is in sound financial shape–and that talks are under way with investors to fund additional expansion efforts.
Meanwhile, Edison spokesperson Adam Tucker says the company hasn't turned a profit because it's focusing on long-term growth–and putting money into the schools it manages.
Tucker blames the plunge in the company's stock price to Wall Street's disappointment that Edison did not receive a contract to manage more of Philadelphia's schools. Yet, he notes, the contract to manage 20 schools represents sizable growth for the firm.
What's more, Wall Street is ignoring the fact that the company recently announced plans to open two new schools–one in Indiana, and one in Kansas City, Mo.–as well as expand operations at 12 existing schools.
Including Philadelphia, these new schools will add another 16,750 students to the 75,000 already being educated by Edison in 133 schools across the nation.
"We are absolutely disappointed with the price of our stock," he says. "But it's important for people to understand that our stock price doesn't have any impact on our operations–specifically the services we provide our schools. For the folks who have been declaring that this is the end of Edison . . . that's simply not the case."
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| Reproduced with permission from the June 4, 2002, issue of School Board News. Copyright © 2002, National School Boards Association. Opinions expressed in this newspaper do not necessarily reflect positions of NSBA. This article may be printed out and photocopied for individual or educational use, provided this copyright notice appears on each copy. This article may not be otherwise transmitted or reproduced in print or electronic form without the consent of the Publisher. For more information, call (703) 838-6789. | |