Tuesday, July 05, 2011

Blackboard Gets Bought

This from Inside Higher Ed:

Blackboard, maker of the dominant online learning platform among nonprofit colleges, has been sold to Providence Equity Partners, the company announced on Friday. The announcement prompted hand-wringing from campus technology officials and reassurances from Blackboard that there are no significant changes in the offing.

“We have some concerns,” says Sam Segran, chief technology officer at Texas Tech University. “Any time somebody goes into private equity, one of the concerns we have is profit motivation and less motivation in terms of meeting educational needs.”

Blackboard’s transition from publicly traded company (its status since 2004) to private equity holding could indeed mean a greater emphasis on earnings, says Trace Urdan, a senior analyst at the investment firm Signal Hill. The new owners will not have to worry about feverishly acquiring other companies in order to make the company’s stock price go up, Urdan says. More likely, Providence will treat its new investment like a cash cow, focusing on the Blackboard products that reliably make money and possibly unloading the ones that do not.

Still, the sale of Blackboard might have a greater impact on Wall Street than on Campus Drive, experts say. The "losers" in this case may be confined to small software companies hoping to be bought out and short-sellers who bet against Blackboard.

As for college and university customers, “I don’t think life changes very much,” says Urdan. For Blackboard to continue to be reliably profitable, it cannot afford to drive clients into the arms of its competitors by jacking up prices, Urdan says. Hence a greater focus on earnings would not necessarily mean a bigger squeeze on customers.

More than half of nonprofit colleges and universities use Blackboard Learn, the company’s learning-management system, which serves as an online environment where professors and students can upload and download course materials, chat with each other, and hold class sessions. Learning management systems are often considered “mission critical,” especially in the fast-growing area of online education. Thus any major shakeup at Blackboard necessarily has a ripple effect across its thousands of higher ed clients...

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