Dot-com dynamo: eCollege profits from online education explosion.

• Author: George, Mary
• Position: Dot-com Dynamo

When the tech bubble burst in 2000, Denver-based dot-com eCollege nearly went with it. But four years later, and after a change in management, eCollege is riding trends in outsourcing and online education to profitability.

Yet it's been a wild ride.

"Mayhem." That's what CEO Oakleigh Thorne recalls awaited him when he hired on at eCollege, shortly after the market bottomed.

The company had created a gainful niche as a one-stop technology source for education and training institutions that sought to put their content online. It had grown quickly and gone public in late 1999--then watched its stock crash. And like many of its brethren, it suddenly looked precariously undisciplined, overstaffed and adrift.

"It was just a very young company with a lot of money, and it had lost focus of its product line and what it was trying to do," Thorne said.

In 1996, Thorne had sold off another dot-com, Chicago-based Commerce Clearing House Inc., a large publisher of legal and tax references. He began investing in eCollege in 1998, then got tapped to guide the company through its tough times.

Since then, eCollege's workforce has shrunk by more than a third, to 220 employees, Last July, it announced its first-ever profit, and the stock has rebounded, too--to more than $26 a share last fall, although it had fallen by late January to under $20 a share. Its 52-week low for the previous year had been $3.75 a share.

In November, the company more than doubled its size by strategically acquiring Salt Lake City-based DataMark, a provider of online enrollment and retention services. Revenue for 2004 is projected at $84 million to $87 million--60 percent from DataMark--with net income of $9.5 million to $11.5 million.

eCollege's client list numbers nearly 300 education providers and includes the Aleyeska (Alaska) Central School District, the National Automobile Dealers Association, three of the four University of Colorado campuses and Rutgers University.

But Thorne said eCollege now is marketing to about 400 large institutions that are focusing on non-traditional students--those who are juggling jobs, families, other responsibilities. They make up higher education's fastest-growing segment.

University online programs are expanding to serve nontraditional as well as traditional students, more and more of whom are taking an occasional online class, said Sean Gallagher, a senior analyst with the research and advisory firm Eduventures Inc.

This year, the number of...