For Subscribers

Get the complete article now!

Six analysts and top management from twelve sector firms examine the education sector in this special 85-page Education Industry issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info465.htm.

TWST: Are there any other companies in the sector that investors should regard as core holdings?

Mr. Sutton: There are a couple of companies. I’m not going to define them as core holdings, because I think they’re going through some growing pains. But if you look at the infrastructure side that I had mentioned earlier, it’s important that companies need to have a way to administer, to track, and to assess how their employees are actually doing with respect to their training. It’s a relatively new concept. And what companies have found is they can do all of those things; they know that their employees are taking the correct courses for whatever they need, they are paying for it correctly (in other words, they’re not overpaying for classes that their employees don’t need), and they can make sure they took the classes and they understand the things that they needed to take from those courses.

TWST: Do the salespeople have the opportunity to refer to that program whenever they feel they need a little refresher course?

Mr. Sutton: Yes, let me explain. There are two different teaching styles. One is synchronous, which is live, another is asynchronous, which represents anytime-anywhere learning. What you can do, and this is deemed to be very effective, is offer a synchronous course with an archive feature for people to use on an anytime-anywhere basis. So to the extent that you have a sales force that is unable to attend, they can obviously go into the archive and take that class themselves at any time.

TWST: What would you have investors do with Saba (Nasdaq:SABA) today?

Mr. Sutton: We have a buy rating on the stock. It is one that we would view as a very attractive long-term investment with a big vision of becoming the next major enterprise software vendor. The other company in that area would be Docent (Nasdaq:DCNT). Docent is a learning management system company that developed a very good solution for the content delivery process, which is trying to marry up with content providers and deliver to the customer content that is delivered within the learning management system. They have begun to make some acquisitions to really build out that effort and, interestingly, just took a pretty significant increase to their pricing, because they separated out their learning management system, content delivery server, and a very good mobile application that they have. We have a neutral rating on the stock, which means we’re not telling investors to buy the stock today, but we think long term, as they build out this software suite, it could be a very attractive investment.

TWST: And the buyer of those companies I assume would be local education systems?

Mr. Sutton: True, although we’re seeing more and more decisions made at the district and even the state level. Good examples would be the State of California, the State of Texas, the State of Georgia, the State of Maine, and the State of Michigan, which have all recently made some statewide decisions.

1) Education Industry - In an in-depth (11,600 words) Analyst Roundtable, Peter L. Martin, Senior Vice President at Jefferies & Company, Inc., Gerald R. Odening, Managing Director at J.P. Morgan H&Q and Jeffrey M. Silber, Senior Vice President at Gerard Klauer Mattison & Company, Inc. examine the outlook for the sector including enrollments in higher education, regulatory issues and share specific stock recommendations.

2) Educational Publishing & Service Companies - In an in-depth (4,700 words) Analyst Interview, Peter Appert, Managing Director at Deutsche Banc Alex. Brown, Inc., examines the outlook for the sector and shares specific stock recommendations.

3) Outlook for Education Stocks - In an in-depth (4,000 words) Analyst Interview, Greg W. Cappelli, Managing Director at Credit Suisse First Boston, examines the outlook for the sector and shares specific stock recommendations.

4) Knowledge Technologies - In an in-depth (4,700 words) Analyst Interview, George Sutton, Managing Director at RBC Capital Markets, examines the outlook for the sector and shares specific stock recommendations.

5) The TWST confidential Off-The-Record survey of management performance at eighteen sector firms asked market insiders about the ability of management teams to create shareholder value.

6) CEO interviews (average 2,500 words). Top management of twelve sector firms examine the outlook for their firm and the sector.