Friday, June 1, 2001

Company That Sells Duke's Online MBA Courses Files for Bankruptcy By GOLDIE BLUMENSTYK Pensare, a company that has worked closely with Duke University and other institutions in using the Internet to sell business courses to corporations, has filed for protection under Chapter 11 bankruptcy laws and is going out of business. The company, based in Sunnyvale, Calif., is the latest of several business-oriented distance-education vendors that have recently scaled back or shifted their business strategies in light of lower-than-expected interest from potential clients. In business education, "the market has not been nearly as receptive to e-learning as everybody thought it would be," says Robert Mittelstaedt, vice dean for executive education at the Wharton School of the University of Pennsylvania. Wharton had been working with Pensare on developing an executive-education course on how to build a business case, but Mr. Mittelstaedt says the company was two years behind on the project and the school had put the project on the back burner. Katherine Leary, Pensare's chief executive, said that the company, founded in 1996, had faced a financing squeeze and lacked a revenue stream to cover its costs. "We didn't get enough traction before the market got tight," she said. Most of the company's 60 employees were laid off during the past several months. About 12 remain but will depart as the company completes the shuttering of its business over the next week or so. The for-profit arm of Duke's Fuqua School of Business is hoping to buy Pensare's most valuable asset, the rights to a software platform used to deliver courses. The platform, called P3, is based on software developed at the business school, and Duke was given equity in Pensare in return for the company's right to develop P3 further and use it to sell courses to corporations. The Fuqua School uses P3 to deliver courses to 200 students in two of its M.B.A. programs and has plans to use it for the 180 students in its Global Executive M.B.A. program as well. Duke Corporate Education, the for-profit arm, also uses the platform for courses it sells to commercial clients. John P. Gallagher, vice president of learning technologies for the for-profit arm, says the P3 platform is valuable to Duke because it is suited to the teaching styles used in the M.B.A. courses. Pensare and Duke have negotiated an agreement that would allow Duke, through an affiliated fund, to buy rights to that platform, and other Pensare assets, for $1.05-million. Ms. Leary said the sale would help to ensure that Pensare's products and customers would be in excellent hands. "Duke has more money to finance it," she said. A bankruptcy judge is scheduled to rule on the agreement at a hearing in San Jose, Calif., on Monday. Background articles from The Chronicle: Internet-Based Business Courses Still Have Potential, Management Educators Told (5/11/2001) Rich in Cash and Prestige, UNext Struggles in Its Search for Sales (5/4/2001) Top Business Schools Seek to Ride a Bull Market in On-Line M.B.A.'s (1/15/1999) Easy-to-print version E-mail this article

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