Close School and layoffs: New Oriental expansion

Muddy water Short after the event of the new Oriental (nyse:edu), in the expansion of teaching network problems again, recently had to "reversals". January 29, the first foreign-listed education technology enterprises in New Oriental announced the second quarter of fiscal year 2013. Net revenue rose to $165.9 million in the company's reporting period, up 30.4% per cent, but in the operating loss, the figure was as high as $26.9 million trillion. The net loss was $15.77 million trillion, well below the 3.31 million dollar level of the same period last year. This embarrassment contrasts with the expansion of the Great Leap Forward in the 2012 years of the new Oriental. In the past year, the new Oriental Domestic teaching center reached 238, far more than the company's internal plans 80~100 new targets. "We will not be adding new teaching centres for the next two quarters." "New Oriental Chief Financial Officer Shedong in a conference call to halt the year-long frenzied expansion, and made it clear that by May this year, the company will also lay off 1000-1500 people to close 15-25 unprofitable teaching centers." "It is expected to achieve year-on-year growth in revenue this year without increasing the teaching center and improving utilization," 30%~35% said. A director from the new Oriental said to reporters that now the new Oriental is a huge company with more than 30,000 employees, and the teacher alone has about 18,000. Naturally, there will be some big companies ' "syndrome", such as redundancy and expansion oversight. Now the company internal to the early teaching point of the lack of meticulous research has made a clear rectification requirements. The cost of expansion although the rent of the teaching center continues to rise at an average rate of 10% to 12% per annum and is facing a strong sniper in the one or two-line city, the new Oriental has decided to start a vigorous expansion in 2012. Shedong said that in the past year, the new Oriental opened 238 learning centers, seriously affecting the profits, and these excesses or need to be two quarters to digest. The plunge in profits soon sparked a rethinking of the oversight of expansion in the interior of the new Oriental. said the person in charge told the Reporter: "In the past year, the new Oriental to attract more trainees to the nearest training, the expansion of the intensity of teaching points increased." But then the market feedback, some of the new teaching points and the market does not match. Although the new outlets serve some trainees, the return of the region's own demand for students is far from enough. "According to a source quoted by people familiar with the matter, the interior of the new Oriental has said that in response to the SEC (US Securities and Exchange Commission) investigation, the company was not enough to control the size of the expansion last year. "New Oriental's policy of focusing on marketing in the past is wrong." Think that a large number of open teaching points, only marketing well after students will come, in fact, is on the detours. "As with most large companies, it is inevitable that the market ' impulses ' will be encountered in development and that the present action should be seen as a strategic adjustment after the event, rather than a mere strategic contraction." The official explained. AccordingNotes that the new Oriental strategy for the excessive expansion of the remedy is to strengthen the utilization of teaching centers. New Oriental's Teaching center utilization in the two quarter last year had a low year. At present, the new Oriental in the country has more than 700 teaching centers, the promotion of Teaching center utilization is mainly in the course of the use of the existing mature, more convenient traffic teaching points for classes professors, while in the non-hot areas of teaching points to open relatively less subjects. "Just as the hotel keeps improving the table rate, the reasonable arrangement of the teaching center will mean opening more courses and increasing the number of trainees," he said. "The person in charge also admits, this to the company's curriculum management put forward the very high request, whether finally can complete implementation needs to observe for a period of time." Mr Yu, chairman and chief executive of the New Oriental Board, noted that revenue from the two or three-line cities outside Beijing and Shanghai grew 40% per cent year-on-year, but as the most lucrative school resource in New Oriental, Beijing and Shanghai were weak during the reporting period, revenue growth was only 20% and net profit fell by more than 50%. "Shanghai study business income accounted for less than 50%, for Shanghai market companies need to solve a wide range of problems." "Layoffs and losses" according to the announcement of New Oriental's layoff plan, the 1000~1500 employee, who was scheduled to be cut May ago this year, will pay 12 months ' salary compensation for its employment, averaging about $6000~10000 severance payments. In addition to the large amount of severance money needed to lay off workers, the problem of the loss of teachers in New Oriental itself has already aroused the concern of the industry. New Oriental Trainer Lilin (a pseudonym) told reporters, such as the new Oriental, learning and thinking of such training institutions in the listing after a large number of staff turnover. "After the listing, the price of training products has gone up, while most employees have been treated in different degrees." Among them, the new Oriental Teacher's pay decline is very fast, the industry's competitive remuneration has ceased to exist. In terms of welfare benefits, some are not even in the industry. "In fact, New Oriental company has been a number of pay-inspired versions, a recent saying is that the new Oriental will be in the next decade to return to the teacher-oriented route, for the" productivity "of the teacher will be the overall promotion of salaries, and for teachers to the title, according to the title to enjoy equity and benefits. However, this claim has not been confirmed by the new Oriental. said the person in charge frankly, education and training market threshold is very low, pay competitiveness is difficult to maintain long-term. Now the new Oriental although a year to achieve 3 million of the number of students, but the teacher's income or directly by the labor calculation, the decline in pay is very easy to cause teachers in the same industry between the frequent flow of companies. Coincidentally, another educational institution that landed in the capital market has reportedly also abolished the teacher's seniority, which has a considerable impact on the retention of senior teachers.