Wednesday, July 02, 2008
The Company Formerly Known as Edison Schools
After 16 years, endless controversy, and a sea of red ink, Edison Schools is no longer. CEO Terry Stecz, who replaced Edison founder Chris Whittle as chief executive in early 2007, announced yesterday that Edison Schools would henceforth be known as edisonlearning, and that the company intends to become a player in education software, focusing on student tracking systems and other "achievement management solutions." Whittle predicted the company would be managing 1,000 school with a million students by 2010 when he lured Benno Schmidt away from the Yale presidency to help launch Edison in 1992. But Whittle and Schmidt could never make the company profitable and after reaching a financial high water mark in February 2001, when the company's stock was worth nearly $2 billion, things went South in hurry when venture capital dried up with the Dot Com Bust, the Securities and Exchange Commission launched an investigation of Edison's revenue reporting, the company lost a string of contracts, a teacher union-led attack on for-profit school managers intensified, and the work of running schools for mostly disadvantaged kids in poor neighborhoods proved a lot tougher, and less profitable, than the company had expected. Nor has the company been able to scare up much new business in the No Child Left Behind era, a period where states and schools systems have scrambled to find help in turning around the many failing schools identified by the law.
Edison's competitors haven't fared much better. Of the dozen or so other substantial for-profit school management companies that sprung up in the 1990s, most have disappeared, switched to non-profit status, or are limping along. Only one or two companies are profitable and they haven't expanded as far or as fast as expected.
So Edison's executives and majority owner, a New York-based private equity firm called Liberty Partners, are hoping that rebranding the company will lead potentinal clients in the education world to give the company a fresh look, to put aside Edison's troubled past and the legacy of it flamboyant founder. But changing the name on the door and moving into the educational software business doesn't alter the fact that Edison spent 16 years and nearly half a billion dollars trying to find a way to run high-quality public schools for disadvantaged kids as a viable business--surely one of the most important experiments in American educational history--and failed. More than anything else, the announcement of edisonlearning is a sobering commentary on school reform. -- |
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