Caliber Learning Network Inc. announced a shift yesterday from one-on-one distance learning to corporate training -- a direction the Sylvan Learning Systems venture hopes will lead to its first profits.
Caliber released news of its shift as it posted a first quarter loss of $7.6 million, up from $6.2 million in the first quarter of 1999. Revenue was $5.1 million, up from $4.6 million in the first quarter of 1999.
Caliber President and Chief Executive Officer Chris Nguyen attributed the losses to a change in how the company records revenue. Caliber moved to the Application Service Provider model, popular among Internet companies and Wall Street, which charges clients monthly for services instead of billing when a contract begins. However, the ASP does not spread out expenses, creating a lopsided balance sheet during the yearlong transition to the new method.
But the accounting shift is only partly to blame for the losses. Eighteen months of focusing on a money-losing program of academics for individuals taxed the resources of the 180-employee company.
Sylvan and MCI Communications Corp. founded Caliber in November 1996 as a graduate-level learning and professional training distribution network. Through partnerships with the Johns Hopkins University and the University of Pennsylvania's Wharton School, Caliber hooked up busy professionals with courses at company-run centers or over the Internet.
Caliber also established an ancillary business to hold training sessions for corporations, with its university partners providing some of the content.
But, Caliber's graduate-level learning programs soon began to lose money, while the corporate training business expanded faster than expected, Nguyen said. Caliber learned it was more efficient and profitable to take in clients such as IBM, because its software could train hundreds at once.
"The academic part was growing slower. It was too complicated to grow them both," Nguyen said.
Now that the focus has shifted to corporate training, Nguyen predicts an increase in corporate contracts and in his sales force. Because the company will continue to spend more on marketing and operating than it takes in, Nguyen said, he does not think it will turn a profit for at least a year.
The losses did not surprise Peter Appert, a San Francisco-based Deutsche Bank Alex. Brown analyst, who said he thinks Caliber's shift will boost revenue in the short term and help the company regain its early momentum.
Shares of Caliber lost 68.75 cents, or 12.5 percent, to close at $4.8125.