Education Industry News

Published February 1, 2002

A sampling of education industry news from The Education Economy, a weekly publication of the market research firm Eduventures, Inc., which conducts research on the pre-K-12, post-secondary, corporate training, and consumer markets worldwide. This copyrighted material is used by permission of Eduventures, Inc.

Natural Selection

With last year seeing little new venture capital inflow, major legislation sidetracked after September 11, and tighter school budgets, “It could be that the best thing about 2002 will be that 2001 is over,” commented Eduventures Executive Vice President Peter J. Stokes in The Education Economy on December 1.

In this chastened economic environment, education companies must achieve success the old fashioned way, he noted: by earning it. Their products must meet customer demands and promise customers a real return on investment.

“In 2001 we saw the economics of natural selection at work,” said Stokes. “Where some firms continue to possess the metabolism of sea turtles, others have shown that they have the metabolism of houseflies. Most of the companies built on bad ideas over the past three years are gone. The result is that in 2002 we will have a stronger genetic stock in this industry, and that will enable us to build more robust companies in the year ahead.”

CTB/McGraw-Hill Acquisition Complements Assessment Offerings

CTB/McGraw-Hill, a provider of educational assessment for the K-12 market, announced on December 3 that it acquired Uniscore, Inc., a test scoring company that specializes in data capture, analysis, and reporting for educational and commercial clients. Offers Accountability Tools to Schools, Inc., a provider of enterprise performance systems for the K-12 market, announced on December 12 it acquired Fox River Learning, Inc., a professional services and consulting group. With the acquisition, Edmin will add Fox River Learning’s financial analysis, planning, and policy consulting products and services to its offerings.

Jostens Exits Recognition Business

In order to focus its resources on its school business, Jostens, Inc. will transfer substantially all of the assets of its recognition business–about 8 percent of overall sales–to Oklahoma-based Midwest Trophy Mfg., the company announced on December 4.

Microsoft Settles Product Pricing Class Action Lawsuits

As part of a settlement of more than 100 class action lawsuits that alleged the company’s products were overpriced, Microsoft announced on November 20 it will provide approximately $1 billion to help make computer technology more accessible to public schools.

While still pending federal court approval, the proposed settlement agreement will span five years and will provide cash, computer hardware, software, technical assistance, and training to more than 12,500 schools and approximately 400,000 teachers.

SchoolNet Closes $5 Million Financing

SchoolNet Inc., a provider of instructional management solutions for the K-12 market, announced on November 26 it closed on $5 million in its series B round of financing. The round was led by Ascend Venture Group, LLC, and included The Princeton Review, Inc., an earlier SchoolNet investor and strategic partner.

Scientific Learning Trims Workforce

Scientific Learning Corporation, a provider of computer-based learning and reading programs, announced on November 29 it will reduce its workforce by about 20 employees, or about 12 percent. The layoffs are expected to lower operating expenses by approximately $1.7 million annually and are consistent with the company’s plan to reduce operating expenses while maintaining strong revenue growth.

VIP Tone Expands E-Learning Offerings

VIP Tone, a platform provider for K-12 and small and medium-size enterprises, announced on November 15 it acquired Mercator Software Pty, Ltd. of Australia, a provider of K-12 learning achievement software and services to educators.

The acquisition strengthens VIP Tone’s offering in the global education marketplace. Mercator’s teacher tools are installed in 40 percent of Australian schools and in a number of U.S. school districts.

The Education Economy is read by leading education company executives, investors, academics, policy experts and education leaders around the globe. To subscribe to The Education Economy, register online at Eduventures, Inc. may be reached at 20 Park Plaza, Suite 833, Boston, MA 02116, 617/426-5622, fax 617/426-5431.