Apollo Group says verdict won’t have affect on business — misses point entirely
January 25, 2008 · Print This Article
Apollo Group leadership thumbs their collective nose at the courts, saying that the $277.7 million verdict against them “will not have a material adverse affect on its business or cash flows.”
While it’s thrilling that the company has enough cash to cover the bond and the finding, investors should note: the company has likely learned very little from the experience.
Like most organizations the size of Apollo, when dealt a blow of this sort, executive leadership takes great strides to insulate operational elements of the company from potential disruption. It’s a hard thing to do, by the way, because the army of employees and faculty are savvy people, and they read their Google alerts daily on various court proceedings involving the company.
One way to calm the waters is to take a hard stance in favor of business as usual, pushing forward as if there were no legal troubles, no jury finding. And as such, the company learns nothing.
According to Apollo, troubles which allegedly lead to artificial inflation of the stock would have been the purview of former leadership, CEO Todd Nelson, who resigned at the bidding of the board on January 11, 2006. Nelson took a few down with him including former CFO Kenda Gonzales, who put the last nail in the coffin of this particular case when she testified that leadership did, in fact, bury a report germane to investors regarding enrollment practices.
“When we received the program-review report, we felt very strongly we did not want it basically tried in the press,” Gonzales told the federal court jury in Phoenix.
Apollo says they acted responsibly. That they consulted expert advisors on the issue. That the jury verdict is not supported by facts or law. Still, Nelson was resigned over the issue and, by in large, the organization shook off the affects of the transition to new CEO Brian Mueller without much trouble.
And as such, the company learns nothing.
I have no doubt that the company feels strongly about this latest storm. And may, based on the facts of the case, stand a better-than-reasonable chance at winning on appeal in the coming months. But none of that changes the fact that the rank and file in the organization operate a guerilla enrollment operation based on numbers and head-count — even if the compensation plan is craftily designed to hide that fact. It is, as they so often say, an “Enrollment Organization”, and no lawsuit will change that on its own merits.
There are other disputes in the offing for Apollo. The constant turmoil surrounding the company’s enrollment efforts, EEOC brouhaha, defrauding investors — they’re all part of a cycle of directed blindness designed with the intent of protecting the company’s assets. The result, instead, is the creation of an environment doomed to repeat past mistakes more gloriously in the future.
Pete,
An interesting commentary. I know you’ve posted in the past that you felt a red tide coming and thought it best to leave. This is clearly part of the red tide.
I think this is a normal perception of big business. To overlook or minimize the impact of such gross legal action. I’ve always likened it to ostrich-style management. Sticking your head in the sand doesn’t make it go away, it leaves you VERY vulnerable with your butt hanging out.
You are right that the employees know what happened, they are intelligent and savvy folks, for the most part, and the new generation of workers (that is millennials) are especially adept at discovery. Sidestepping major issues forces employees to wonder and fill in the gaps.
The vision at Apollo always was, provide a great education with great customer service and profits will follow. Has Apollo departed from the basic notion of good stuff, served well = money for all?
Mike
Yeah, Mike. I agree with this for the most part. And for most companies, it may be endemic of the organization that “lessons learned” leans more toward “crises averted.” What is so hard about rank and file operation at Apollo was this culture of crisis aversion that had come so far that employees hungry and eager for change, willing to do what it takes to make change, were so often brushed off in the wake of “Mission Accomplished” style banners and flowery press releases.
It’s a tough position to be in, no doubt: being aware of violation in the works, yet knowing that admission of violation poses great and imminent threat to operation itself? No. No thank you. Not for me.