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Apollo Group in student-recruiting lawsuit Settlement Talks

By Bettina Padurano for CEOWORLD Magazine Updated:October 1, 2009

Apollo Group Inc., (APOL) which is in settlement talks to resolve a student-recruiting lawsuit, is facing a liability of $40 million to $200 million, an analyst report said Thursday.

In his report to investors, Trace Urdan, a stock analyst for Signal Hill Capital in San Francisco, wrote that “the high end (of $200 million) is the point at which damages begin to exceed what a judge would likely deem reasonable” and “the low end (of $40 million) is the minimum” plaintiffs attorneys are likely to accept.

The estimate is that of an outside legal expert hired by Signal Hill Capital, Mr. Urdan said in an interview. His firm had feared that Phoenix-based Apollo’s liability would be “larger than most investors had considered,” Mr. Urdan said.

Mr. Urdan, who has a “buy” rating on the stock, characterized the legal expert’s settlement estimate “as a positive,” adding that “only a settlement in excess of $500 million would cut meaningfully into the company’s investment plan and weigh on the stock.”

Apollo Group said in a Securities and Exchange Commission filing Thursday that it is in settlement talks to resolve a lawsuit alleging certain student-recruiting violations, wsj reported.

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