Virtual learning losses shrink

January 17, 2003

Public companies selling e-learning are "edging closer to profitability", according to the Observatory on Borderless Higher Education, a service set up by Universities UK and the Association of Commonwealth Universities.

An analysis of the share prices and financial results of public companies with interests in secondary education confirms the widespread assumption that "bricks-and-mortar" firms have been relatively successful compared with e-learning companies - which have seen widespread losses and collapsed share prices.

But the briefing note also says: "E-learning losses are shrinking year on year, suggesting that three to five years of product development and operational reality may begin to pay dividends."

Richard Garrett, research associate and author of the note, said: "Many e-learning companies were set up in the dotcom boom with high evaluations that they could not possibly sustain. Those that have done well, such as Peoplesoft, were part of established companies with alternative asset bases."

The note is the first in a series that will map the emerging education industry. The second briefing note will look at the developing relationships between public companies and conventional universities and colleges. The third note will begin an assessment of selected private companies.

The analysis splits the education companies by country (US and non-US) and by type - for example, e-learning, bricks-and-mortar and IT training companies.

In 2001, 16 bricks-and-mortar firms were in profit (80 per cent), with four in the red (20 per cent), compared with four e-learning and related firms in profit (22 per cent) and 14 in the red (78 per cent).

The briefing note adds that boundaries between e-learning companies and conventional ones are beginning to blur.

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