Editor's note: Corinthian Senior Vice President for Investor Relations Anna Marie Dunlap was kind enough to respond to this article, clarifying that Corinthian conducted the bulk of its $70 million share buyback late in Q2 2006. By year end, 3.5 million shares had been repurchased; 2.2 million more were repurchased subsequent to the end of the quarter. The effect of most repurchases taking place toward the end of the quarter, and of part of the buyback occurring in Q3, was to reduce the buyback's effect on the firm's weighted average share count in Q2. Dunlap cautioned that "The full impact of the buyback on the weighted average share count won't be seen until Q4 06" but that the weighted average shares outstanding shown in the Q3 earnings report should decline to approximately 88 million.

It's not often you see a company report a halving of its profits -- and then see it immediately rewarded with a 5% surge in its stock price. But that's precisely what's happened Tuesday morning at for-profit educator Corinthian Colleges (NASDAQ:COCO).

Yesterday, we took a quick look at analyst forecasts for the stock in preparation for the company's fiscal Q2 2006 earnings announcement. Now that the news is out today, let's examine how well Corinthian did.

First off, the company beat the Street's muted expectations for this quarter. Analysts were calling for profits to be cut in half; as it turned out, net profits declined by "only" 45%. So that's good. More interestingly, Corinthian did this on below-expected revenue. Wall Street had the company pegged for $248.6 million, an amount that would have meant a tiny increase in sales year over year. However, in actual fact, Corinthian's sales declined by one measure (firmwide sales for the quarter came in light at $244.5 million) and increased by another (if you net out the sales from Corinthian's divested Corporate Education Services unit, sales from continuing operations increased by 1.7%).

Better news comes in the form of Corinthian's progress in generating free cash flow. The company has generated $60.6 million in FCF year to date. That's up 65% from last year's H1 FCF of $36.7 million.

Here ends the good news. The bad news is that most everything else looked bleak at Corinthian. Total student enrollment declined 5% (for a total of 3,703 warm bodies). New student starts declined by 3%.

Even the decline that should have been good news -- the decline in share count -- looks like a silver cloud with a gray lining to this Fool. As I mentioned yesterday, one thing we were looking for at Corinthian today was news on how far its $70 million share-buyback program had progressed. Well, we got that, all right: The company blew through the entire $70 million -- enough greenbacks to buy back 5.7 million of its shares at their average trailing-50-day price.

Yet how much did Corinthian's share count actually decline? Over the past year, its weighted average diluted shares outstanding fell by just 793,000 shares. Where'd the other 4.9 million go? My guess is that it went to cancel out stock dilution. But if any Fools out there see another explanation for the discrepancy between money spent on what CEO Jack Massimino termed a "prudent use of capital," and the decline in share count, I'd love to hear it.

Fool contributor Rich Smith has no position in Corinthian Colleges.