PLATO Learning, Inc. (TUTR)

Plato Learning operates in the development and marketing of software for education and related services. It is a leading provider of computer and web-based instruction, curriculum planning and management, assessment and related professional development and support services to schools, colleges, teacher education programs, correctional institutions, and military services. The company competes with several traditional educational print material and live classroom providers.

In US, schools have largely met the infrastructure and hardware goals that drove their technology purchases five years ago. Comprehensive courseware is now the fastest growing segment of the electronic materials market. Growth in this market will be fueled over the next few years by an increasing emphasis on quality of education at local, state, and national levels and the increase in assessment of grades.

For the year ended October 2006, licensing fees, subscription and services contributed 41%, 20% and 39% of revenues. Further going, the company expects its overall productivity to improve for 2007, as it moves away from perpetual licenses to subscription-based model. With this the management expects sales order growth to be in the range of 10-15% and revenues to decline by 6-11% for 2007.

For the past few years, the company is not able to reach profitability mark. However the company was successful in improving its net loss by 19% in 2006 and expects its net loss to improve further by 15-30% in the coming year. Products from perpetual licenses have higher one-time selling prices than those, which are licensed on a subscription basis. However, the latter are renewable at the end of each subscription period. All these factors make Plato Learning a star in the reckoning for electronic education software market.