By Sam Mamudi

NEW YORK (Dow Jones) -- The market turmoil claimed another victim on Wednesday, as asset manager BlackRock Inc. reported an 84% decline in its fourth-quarter profit, compared to the year-ago period.

BlackRock (BLK) had until now avoided the worst of the financial crisis, reporting a 15% year-on-year decline in its third quarter profits. BlackRock's shares over the past year have, along with shares of Franklin Resources Inc. (BEN), Eaton Vance Corp. (EV) and T. Rowe Price Group (TROW), fallen the least among the major asset managers.

But the firm's fortunes couldn't hold out during the bleak fourth quarter.

BlackRock's fourth-quarter net income fell to $53 million, or 40 cents a share, as revenue dropped 26% to $1.06 billion. On an adjusted basis, it earned 68 cents a share. Estimates from analysts surveyed by FactSet Research were for $1.26 a share.

Shares of BlackRock were down about 4.5% in pre-market trading. The firm's stock fell 11.7% on Tuesday.

"[Economic] problems accelerated in the second half of the year and 2009 is beginning on difficult footing with greater headline risk of growing unemployment, weak earnings and increased bankruptcies," said Laurence Fink, chairman and chief executive officer at BlackRock.

Last week analysts covering the asset management industry predicted that fourth-quarter results would be the worst on record for the industry.

Net inflows

But despite the fall in its profit, BlackRock fared better than many of its rivals in the last quarter. It saw $129.1 billion of net new business, a 10% organic growth rate, in the period. Even with a fall in asset values of $80.5 billion, assets under management grew $48.6 billion.

By contrast, Franklin last week reported an 18% quarterly drop in its assets under management, to $416 billion from $507 billion.

"The strength and potential of our platform is evident in our 2008 new business momentum, but our financial results were significantly harmed by the sharp decline in markets," said Fink. "Management fees, performance fees and non-operating income have all suffered."

BlackRock reported that it saw net new business in 2008 of $167.6 billion, a 12% organic growth rate. But that was offset by a $217.1 billion decline in asset values due to market falls and the decline of the dollar, it said.

BlackRock's profit for 2008 was $786 million, or $5.91 a share, a fall of 21% from 2007 results. Adjusted net income for the year was $858 million, or $6.45 a share, also a 21% fall from 2007.

The 2008 numbers included a $38 million charge associated with costs incurred by a 9% cut in BlackRock staff.

"I am realistic about the fact that our industry and our business are smaller solely by virtue of sharply lower asset values," said Fink. But, he added, "I believe that industry consolidation will accelerate and that BlackRock will have meaningful strategic opportunities."

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