E-learning seems as natural as, say, buying books online or planning a vacation using a website. Yet it is easy to forget that e-learning is a relatively new industry and subject to growing pains.
This was definitely evident last week with the earnings report of SkillSoft
However, SkillSoft announced that its bookings slowed (although they will even out in the second half of 2004). That's not what investors wanted to hear, and the stock price plunged 24.7% to $8 per share. Yet, the company still has a strong balance sheet -- with about $106 million in cash -- and a stable group of customers. SkillSoft also has mouth-watering gross profit margins of 90%.
Over the long term, e-learning looks like a good bet. As the population gets older and more mobile, there is a need for more flexible education. That fits with what SkillSoft provides: anytime, anywhere, anyplace education.
In fact, the e-learning space has undergone much consolidation and SkillSoft may be buyout bait. One of its direct competitors, DigitalThink
Moreover, with the success in the for-profit education sector, there are many well-capitalized suitors for SkillSoft, such as Career Education
Fool contributor Tom Taulli is the author of The EDGAR Online Guide to Decoding Financial Statements. He does not own shares in any stocks mentioned.