Company bets its future on 'distance learning' Baltimore's Caliber links workers with top graduate programs

August 16, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

For Dr. Henry Eisenberg, a surgeon at Cleveland's Hillcrest Hospital, a 10-week course on managed care at Johns Hopkins University seemed almost a necessity.

"None of us was trained in business when we went to medical school," he said. "And because we're dealing with these HMO plans and medicine has become big business, there is a need for education."

What makes Eisenberg's experience in Hopkins' 4-year-old business of medicine program unusual is that he never set foot in Baltimore.

Eisenberg took his course in a Cleveland classroom with help from a satellite connection linked to a Baltimore studio through Caliber Learning Network Inc., a Baltimore company that wants to link the nation's top graduate programs to workers nationwide.

Last week, Caliber said it would deliver at least two graduate certificate programs by next September as part of an agreement with Columbia University's Teachers College. This fall, the company will start a program with the Wharton School at the University of Pennsylvania.

"Our basic premise is there's a market for Wharton business programs outside the Philadelphia area," said Chris L. Nguyen, president and chief executive officer of Caliber.

Caliber is a joint venture of Sylvan Learning Systems Inc. and MCI Communications Corp.

Others also want a piece of a lucrative and growing market in linking ivory towers to satellite broadcasting, video-conferencing and Web-based training. Corporations budgeted $60 billion in 1997 for employee training, 30 percent percent more than in 1990.

Caliber expects competition. Westcott Communications Inc., for example, has a one-way satellite-based connection used by many companies that could be converted into an interactive network.

Universities interested

Top universities are also looking at the market. Stanford University plans to award master's degrees in electrical engineering entirely online for the first time this fall. Duke University's Fuqua School of Business offers a 19-month MBA degree program to students around the world. Oxford University, Britain's oldest and one of the world's most prestigious universities, says it plans to offer degree courses over the Internet beginning next year.

Marian Moore, associate dean for executive MBA programs at Duke's Fuqua School, expects to see even more movement toward distance learning.

"Once they begin to see the technology, the best schools are going to recognize what's unique about their brand name," said Moore, who is also a marketing professor. "Whatever their delivery system is going to be, we'll see lots of people trying new things."

Caliber got its start after Baltimore-based Sylvan conducted video-conferencing sessions to train employees around the country. The idea behind those sessions -- and Caliber's approach -- is that conventional "top-down" communications systems filter the message as it changes hands.

"When you train the trainer, there's a diminution of the message," said Nguyen, 36, who was vice president of Sylvan's computer-based testing division before being tapped by Sylvan executives to run Caliber.

Organized in November 1996 by MCI and Sylvan, Caliber spent more than a year gearing up, with $4.5 million investments in technology and construction of 41 locations nationwide. Since its inception, Caliber has spent $10.5 million for operations.

In May, the company completed an initial public offering of 5.7 million shares that raised $58 million. After the offering, Sylvan and its executives owned about 35 percent of shares outstanding. MCI, which is being acquired by WorldCom Inc. , owns about 10 percent.

All the while, losses mounted.

Caliber reported $15.2 million in losses during its first year and said it expected significant losses for at least the two next years. Last month, the company reported a net loss for the first six months of $14.9 million.

Shares of Caliber, which went public at $14 and rose above $20, closed at $8.9375 Friday.

Trace Urdan, a BT Alex. Brown analyst, said Caliber is suffering from the boom-and-bust affliction that has made Internet stocks volatile. "A buzz around the stock attracted momentum investors who became impatient with the stock at about $20," he said.

The company has performed as it said it would, he said, but investors are hungry for good news.

"They need to see another big academic contract, or they need to see a big corporate contract," he said. "With the company projecting losses, it definitely has some big risk elements to it."

Still, BT Alex. Brown has a buy rating on the stock.

"What's become crystal clear to employers and employees is there's a significant payback from incremental training and incremental education for workers," said Peter P. Appert, a colleague of Urdan at BT Alex. Brown.

'A big market'

"This is a big market, it's a growing market, and it's a changing market. And there are no leaders. It's just a wide-open category."

Caliber is going after the corporate and academic markets.

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