This will be the third time in a row that I've written unflatteringly of for-profit educator DeVry (NYSE:DV). Followers of the company will recall that as early as April, DeVry was already exhibiting an unhealthy lack of correlation between revenue growth and earnings growth. That trend reversed itself temporarily in the company's fourth quarter but remained strong over fiscal 2004 as a whole.

In the first quarter of fiscal 2005, however (reported on Wednesday), this bad situation got a whole lot worse. Revenues actually declined year on year (albeit by a tiny 0.4%), and profits simply collapsed. In Q1 2004, DeVry earned $0.15 per share; in Q1 2005 that dropped to just $0.06 -- and $0.02 of that number came courtesy of DeVry changing its accounting procedures.

Think that's bad? It gets worse. The one redeeming fact I found in the company's numbers for fiscal 2004 was that while generally accepted accounting principles earnings left much to be desired, the company was quietly continuing to rake in real cash earnings in the form of free cash flow, which had been rising at an average rate of 80% per year over the past two years. No more. In Q1 2004, DeVry posted free cash flow of $49.8 million. In Q1 2005, that number, too, collapsed -- to just $19 million, for a 62% decline.

The company cited three factors as contributing to the quarter's anemic performance. First, DeVry is investing in offering more of its students online courses -- an option that has proved very popular at competitors Apollo Group (NASDAQ:APOL), Career Education (NASDAQ:CECO), and Laureate (NASDAQ:LAUR). Bully for DeVry -- online course offerings offer higher margins and lower costs over the long term. This is a good move despite its costs. As for the other two trends, they are mostly out of the company's control: Students are not signing up for DeVry's bread-and-butter technology classes, and of those who do enroll at DeVry, more are coming part time.

It's too soon to say this for sure, but it appears that the long-heralded consolidation in the for-profit education game may finally be afoot. DeVry is clearly losing its students to someone. And these erstwhile DeVry students are not getting full-time jobs and re-entering the workforce to fuel our booming labor market. In all likelihood, DeVry is losing students to its competition already named, and others such as ITT (NYSE:ESI), Strayer (NASDAQ:STRA), and Corinthian Colleges (NASDAQ:COCO). If that continues, DeVry's days as an independent company might well be numbered.

Fool contributor Rich Smith owns no interest in any of the companies mentioned in this article.