By Sam Mamudi
NEW YORK (Dow Jones) -- Invesco Ltd. on Friday became the latest
asset manager to report a steep fall in its fourth-quarter profit.
The firm said net income was down 82%, to $31.9 million, or 8 cents
a share, from $175.9 million, or 43 cents a share in the year-ago
period.
In the past two weeks, T. Rowe Price Group (TROW) said its
fourth-quarter profit was down 87%, BlackRock Inc. (BLK) reported
an 84% fall and Franklin Resources Inc. (BEN) saw a 77%
decline.
AllianceBernstein (AB) said fourth-quarter profit fell 73% and
Janus Capital Group (JNS) saw a 60% fall. Legg Mason Inc. (LM)
reported a record quarterly loss of $1.5 billion.
The falls have been caused by outflows, market declines leading
to lower asset valuations and one-time charges such as
layoff-related expenses and write-downs.
"Throughout 2008 and particularly during the fourth quarter, our
industry faced unprecedented market challenges," said Martin
Flanagan president and chief executive at Invesco.
Invesco saw its assets under management fall 13% during the
quarter, to $357.2 billion, from $409.6 billion on Sept. 30. Lower
market values and less favorable foreign exchange rates were the
main reason for the fall, though the firm also saw $2 billion of
net outflows during the quarter. Assets were $500.1 billion on Dec.
31, 2007.
Invesco's net outflow levels compare favorably to most of its
rivals.
Franklin, which closed the quarter with $416.2 billion in
assets, saw net outflows of $18.1 billion in the fourth-quarter,
while T. Rowe, which had assets of $276.3 billion on Dec. 31, said
its net outflows were $2.4 billion. AllianceBernstein had $23
billion of net outflows during the period, closing the quarter with
$462 billion.
BlackRock saw $129.1 billion of net new business in the fourth
quarter, $101.8 billion of which was troubled assets on behalf of
governments and banks. BlackRock finished the quarter with assets
up $48.6 billion, to $1.307 trillion.
Under Flanagan's stewardship, Invesco has put in place reforms
to improve investment returns and streamline operations. The
results of the reforms have led to steadier performance by the fund
firm.
In early trading Friday the stock was up as much as 6.7%, but at
the latest was up about 1%, at $11.64. Invesco's stock was down
11.6% Thursday, and is down 56% over the past 12 months.
Invesco said its fourth-quarter results included $21.1 million
of costs relating to savings initiatives and vacated properties,
$14.2 million in investment write-downs and $7.7 million of foreign
exchange losses. Without these charges, fourth-quarter profit would
have been 17 cents a share, it said.
Analysts surveyed by FactSet Research had expected, on average,
profit of 19 cents a share.
The write-down related to the company's investments in certain
collateralized loan obligations and other seed money, it said. It
did not provide further details.
For the full year, profit was down 28.5%, to $481.7 million, or
$1.21 a share, compared to $673.6 million, or $1.64 a share, for
2007. Revenue from management fees fell 15%, to $2.6 billion from
$3.1 billion in 2007, while 2008 operating income fell 25%, to
$747.8 million from $994.3 million in 2007.
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