According to documents filed with the Securities and Exchange Commission, Edison has incurred losses in excess of $140 million in its eight-year history. And the company's initial public stock offering on the NASDAQ last month didn't help matters: Investors weren't willing to pay more than $18 a share, far less than the expected range of $22 to $25. The New York Post called the launch a "dud" while noting that Edison founder Chris Whittle and president Benno Schmidt had still made out nicely--Whittle's share of the company is now worth some $205 million, while Schmidt's is valued at $16.7 million.
"Well, it wasn't dramatic, that's for sure," says Bill Parent, a consultant at Boston-based investment and consulting firm EduVentures. Investors didn't like Edison's complicated business strategy and heavy losses, he says; still, many believe the company will make money, just not anytime soon. "Everybody right now is just sort of sitting and waiting," Parent offers.
Duane Ellis, Edison's regional vice president for the Midwest, agrees. "As Edison continues to grow," he argues, "we will achieve significant economies of scale which will allow us to reach profitability."
But that argument, cited by Edison officials whenever the company comes under fire, has been drawing increasing scrutiny. Recently, Dallas superintendent Bill Rojas clashed with his school board over a plan to have the firm take over nine public schools. The board voted against the idea, with several members questioning Edison's financial situation and business strategy. The next day, Rojas showed reporters tin cans emblazoned with the names of Edison's sharpest critics, placed a $20 bill in each, and announced that he was ready to "tin-cup" for the $30 million investment Edison had promised. He also offered to try "special education techniques" on any board members who didn't see the advantages of working with the company. After the resulting firestorm blew over, the board voted to turn six schools over to Edison.
Ellis, who attended the Cooper meeting, says the company must work harder to overcome what he considers negative stereotyping by critics. "The profit motive may, in their minds, skew what they believe our company will do," he sighs. "It was a very uncomfortable night."
Cooper parent Stefan Kren has another idea for how Edison might avoid similar pummelings in the future. Sitting in his car after the meeting, his long gray hair pulled back in a ponytail and a very utilitarian pair of glasses perched on his nose, Kren shakes his head in disbelief: "They come in here behind this shield of Armani suits and gold jewelry. I mean, maybe that kind of thing works in Minnetonka, but it's just not going to go over very well with this crowd." With a smirk, he adds: "These guys have to do a better job on their homework."