NEC Still Losing, but at a Slower Pace : Turnabout: Analysts credit reduced red ink in the third quarter to success of the Irvine company's reorganization efforts.

NEC Still Losing, but at a Slower Pace : Turnabout: Analysts credit reduced red ink in the third quarter to success of the Irvine company’s reorganization efforts.

By CRISTINA LEE

Oct. 30, 1990 12 AM PT

TIMES STAFF WRITER

IRVINE —

National Education Corp. continued to lose money in the third quarter but at a slower pace than in recent quarters, prompting analysts to say the firm’s reorganization is taking hold.

The struggling Irvine-based company said it lost $1.3 million on revenue of $95.9 million for the three months ended Sept. 30, compared to a net loss of $6.5 million on revenue of $94.2 million for the same period in 1989.

For the nine-month period ended Sept. 30, the company reported a net loss of $16.1 million on revenue of $269.3, compared to a loss of $1 million on revenue of $290.3 million in the same period last year.

The company, which provides vocational training and services, attributed its third-quarter loss to corporate expenses and interest payments of $5.3 million on $57.5 million in current debt and $57 million in subordinated debentures.

“I don’t think any of the operations have shown any problem,” said the company president, Jerry Cwiertnia.

He said that the company anticipates further improvements the rest of the year as “unemployment rises and as unemployed individuals look at additional ways of enhancing their skills” by attending vocational schools.

Cwiertnia said National Education’s troubled Applied Learning subsidiary in Naperville, Ill., has shown improvement by offering new educational programs and drastically reducing its expenses.

Analysts said the third-quarter loss was less than expected, indicating the restructuring program was finally turning it around.

“All divisions did fairly well,” said Fred Anschel, analyst at Dean Witter Reynolds in New York. “Applied Learning did well and continued to generate positive cash flow for the company, which is important because this is the largest subsidiary. Also, the vocational school divisions made progress in improving its retention of current students. . . .”

Byam K. Stevens Jr., an analyst with H.G. Wellington & Co. in New York, added that the enrollment for the company’s vocational school division in September was better than expected.

“The enrollment in their vocational school gets penalized when the economy is good and when unemployment shrinks,” he said. “Now that unemployment is on the rise, certain percentages of these unemployed people go back to school, usually to vocational schools, to be retrained. . . . for new skills.”