EDU: missed 5 cents

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in its fiscal Q4 2007 earning. The analysts were expecting 1 cent, while EDU reports loss of 4 cents. Ouch, that’s even worse than last week’s Google’s miss (3 cents).

Seriously, I don’t think missing a few pennies is not big deal for long term investors. But the reason behind the miss is more important. In EDU’s case, on the surface it’s the seasonality: the late arrival of Chinese New Year this time push sales from fiscal Q4 to Q3.

I did listen to its conference call (7 AM!), here are a few highlights:

1) The English training still is the main revenue source and growth driver, that includes: oversea test preparation (students enrollment increased from 35,000 in fiscal 2006 to 58,000 in 2007) ; kids English; middle school students English.

2) New growth area: other subjects (math, physics, chemstry etc.) for middle school students; pre-school kids education (not limit to English).

3) Tier one, tier two: plan to add more learning centers in tier one cities (Beijing, Shanghai), note Shanghai is the fastest growth city; it won’t open many schools in tier 2 cities (mostly kids English) where it did not get good name recognition (this strategy is opposite to Home Inns’).

The stock got punished today as people were expecting a block buster number. I don’t bet on earnings these days, nor will I try to catch the falling knife here. I think a 30% growth is good if they can sustain the growth for a while, but the street obviously expects more.

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