DeVry 4th-qtr profit estimates disappoint

For-profit education provider DeVry Inc warned that profit for the June quarter will fall far short of market expectations as it spends more to boost falling enrollment at its many colleges, sending its shares plunging 23%.

"The bigger piece was the higher cost structure relative to the enrollment levels and if you roll that forward into fiscal 2013, that is going to have a disproportionate hit to earnings," Morningstar analyst Peter Wahlstrom said.

DeVry which runs Keller Graduate School of Management, Chamberlain College of Nursing, Ross University and the Carrington Colleges Group said, it expects new enrollment to fall 15 to 17 percent at its DeVry University and 19 to 21 percent at Carrington Colleges.

A fall in revenue was partly due to increase in scholarships awarded to students in DeVry University's May and July classes, the company said. It also spent more money on inquiry generation.

DeVry expects fourth-quarter adjusted earnings of 43 to 46 cents per share, on revenue of between $500 million and $510 million.