The Business of Distance Education

The business of distance learning – online education courses offered by colleges, universities, and trade schools – is an up and down affair. On the surface it would seem that distance learning providers are doing quite well, but according to a May 12, 2005 report at the Motley Fool financial website, the stocks of companies like eCollege and SkillSoft are earning less than honorable marks in the market. There is no plausible explanation for the drop in eCollege’s stock price from $18.18 per share to $9.07 as of the date of the report since the distance learning company’s quarterly report noted a net increase in first-quarter revenue of 21% compared to the first-quarter of 2004.

Perhaps it is the still sketchy reputation of distance learning and online education that is causing investors to be shy about the companies. Internet based companies of all kinds with the exception of giants like eBay and Amazon have traditionally had rocky rides ever since the dot com debacle of the late nineties. Presumably, those trends will soon change.

Distance learning is growing every day. Because online education offers opportunities in adult education unlike any that have existed before, the business itself is growing by leaps and bounds. In 2001, the British market research firm IDC made the prediction that the worldwide distance learning and online education market would be worth $23billion by 2004. While numbers of that magnitude have yet to be attained, they are much more realistic for the coming years than they were four years ago.

Distance Learning is not just for adults anymore. Part of the growth of distance learning as an industry is stemmed by the fact that, though it was started as an easy alternative to night school and physical adult education classes, many high school and elementary school children are joining the distance learning glee club and receiving their primary education online. By 1999 more than a million American children were being home schooled; taught by their parents at home rather than in a traditional school. The numbers have grown since then and with online education and distance learning options becoming available, more are sure to join the ranks in the coming years.

What this means for investors is that the distance learning business is far from flunking and the decreasing stock prices of online education providers today could be indicative of a bull market after graduation.

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