Caliber trims its loss for quarter

sales rise

Educational services company to produce live classes for IBM

February 24, 2000|By Sean Somerville | Sean Somerville,SUN STAFF

Caliber Learning Network Inc., an Internet-based educational services company, reported a fourth-quarter loss of $5.5 million yesterday, smaller than the $8.1 million loss in the comparable period of 1998.

Even with the loss of 45 cents per share, down from 66 cents in the year-earlier period, sales increased 63 percent to $7.5 million from $4.6 million.

The Baltimore-based company also announced yesterday that International Business Machines Corp. will use Caliber to produce live training sessions.

That agreement, the terms of which were not disclosed, followed eight deals that Caliber reached in the fourth quarter with partners including American Express Co. and Syracuse University.

"This past year has been very exciting for us," said Chris Nguyen, president and chief executive officer of Caliber. "We entered into several new contracts with leading corporations and universities, and most importantly, launched our Internet strategy, which is now the core focus of the company."

Caliber, an affiliate of Sylvan Learning Systems Inc., said the Internet strategy, which allows clients to offer training that can be accessed from work or home, started to produce revenue in the fourth quarter.

Trace Urdan, an analyst for DB Alex. Brown, said the losses were narrower than he expected, but that revenue also fell short of his expectations.

"The academic segment of their business is not panning out as well as we and the company had hoped," said Urdan, who has a "buy" rating on the stock.

For the year, Caliber reported a net loss of $22.5 million, or $1.82 per share, down from a net loss in 1998 of $29.1 million, or $2.61 loss per share. Net revenue increased 69 percent for the year, to $26 million in 1999 from $15.4 million in 1998.

Caliber's agreement with IBM calls for it to produce training sessions in support of IBM's Application Development Solution.

Urdan said the deal has the potential to be worth several million dollars in coming years.

The analyst also said IBM is the type of customer that Caliber must attract to make up for the fewer-than-expected academic deals.

He said Caliber had difficulty executing its original plan of using its 40 classroom-type centers to deliver academic instruction. He said distance learning "is really about any time, any place," so that Caliber's approach of delivering distance learning classes at specific times was not working. Urdan also said universities, which move slowly and treasure their brand names, made offering such programs difficult.

"The writing was on the wall earlier this year that they had to be Web-based to be successful," Urdan said.

He said he expects Caliber to close some of its 40 centers while it shifts its emphasis this year from the classroom to the Internet.

Urdan also said Caliber's strength is that it can turn corporate content into Internet-based instruction more quickly and effectively than many of its rivals.

The transition might mean lower revenue from classroom rentals, but that a long-term move to distance training could put Caliber in a position to tap a market worth tens of billions of dollars. "This is a giant market opportunity," Urdan said.

Caliber shares fell 56.25 cents yesterday, to close at $7.6875.

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