MutualFundWire.com: UPDATE 11 | Third Quarter Earnings Results for Fund Companies
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Tuesday, November 13, 2007

UPDATE 11 | Third Quarter Earnings Results for Fund Companies


The latest to report third-quarter results is Minot, North Dakota-based Integrity Mutual Funds.


Nuveen reported third quarter earnings of $43.6 million, a 6 percent slip from the third quarter last year. The company's EPS was 51 cents per share, down 9 percent from last year. Nuveen attributes the slip to a 14 cents a share expense associated with the sale. The expenses incurred as a result of the sale to Madison Dearborn partners include: $7.9 million due to the acceleration of vesting in certain options; $3.3 million in additional transaction-related expenses; $6.2 million in payments to Merrill Lynch to terminate closed-end fund trailer fee obligations on four funds; and $2.3 million in recruiting and relocation expenses. Analysts with Thomson Financial estimated that Nuveen would earn 68 cents per share.

Wells Fargo, which on Tuesday reported a 4-percent increase in net income to $2.28 billion, said its asset management unit posted double-digit growth in revenue, earnings and assets under management. Wells Fargo's mutual fund division saw a 19 percent increase in assets compared to a year ago, ending the quarter with $143 billion in fund balances.

BlackRock reported an EPS of $1.94, beating Wall Street analysts' estimate is $1.91 a share. Net income for the third quarter was $255.2 million and the company's AUM totaled $1.3 trillion as of September 30, 2007, up 6 percent since the second quarter-end. BlackRock saw inflows in all asset classes in Q3, led by $30.2 billion of net subscriptions in cash management products in response to highly unsettled market conditions.

State Street reported an EPS of 91 cents per share, up from 83 cents per share a year ago. The company missed the earnings forecast of 94 cents a share. The earnings are a pleasant surprise for State Street though as it recently saw its Limited Duration Bond Fund blow up, and is also the target of a lawsuit filed by Prudential Retirement Insurance and Annuity Company alleging State Street's misconduct at two other bond funds cost its plan participants upwards of $80 million. AUM for SSgA is up 22 percent from last year, totaling $2.0 trillion as of September 30, 2007.

T. Rowe Price reported earnings per share of 63 cents, dead-on with the Wall Street analyst's estimates, also of 63 cents per share. Assets under management rose to $396.8 billion as of September 30, up 4.5 percent from June 30, 2007. Net income for T. Rowe was nearly $175 million in Q3. In its earnings report T.Rowe cited its target-date retirement funds as a significant source of mutual fund asset growth, gaining 11.5 percent or $2.8 billion during the third quarter to total $27.1 billion as of September 30, 2007.

Waddell and Reed reported earnings per share of 39 cents, right in line with what Wall Street analysts predicted. The company reported net income of $32.0 million, in Q3, compared with $29.7 million in Q2. AUM for Waddell was $59.4 billion as of September 30.

Calamos reported slightly disappointing results with net income falling from $8 million in Q3 of 2006 to $7.1 million in Q3 of 2007. Earnings per share for the third quarter of this year were 32 cents, missing analyst's predictions by 2 cents a share. There was a bright spot for Calamos though, assets under management rose almost 7 percent to $46.7 billion from $43.8 billion at the previous quarter's end.

Legg Mason is reporting its results for the second quarter of its fiscal year, ended September 30. Legg earned $1.23 per diluted share, missing Thompson analyst's expectations of $1.29 a share by 6 cents. Net income rose to $177.5 million, up 24 percent from $143.7 million, in the second quarter of fiscal 2007. Total AUM stands at $1.012 trillion, up 13 percent from $891.4 billion on September 30, 2006. Chip Mason attributed Legg's mixed results to fund outflows caused by recent underperformance.

Affiliated Manager's Group beat the analyst's Q3 expectations by a penny with an EPS of $1.56 a share. Net Income for the third quarter of 2007 was $42.6 million, compared to $33.1 million for the third quarter of 2006. In AMG's release, president and CEO Sean Healey said that highlights of the third quarter included exceptional results among the company's growth equity managers Friess Associates, TimesSquare, Renaissance and Frontier.

Cohen & Steers reported income of 37 cents per share for Q3, missing analyst's expectations of 42 cents a share by 5 cents. The company reported net income of $15.9 million, up from $15.7 million in Q3 of 2006. The company explained the miss on share price as the result of a 9 cent per share expense associated with the payment of an additional compensation agreement entered into in connection with the offering of Cohen & Steers Global Income Builder, Inc., a closed-end mutual fund. Cohen was not immune to the market turmoil over the summer; it recorded net outflows of $468 million from open-end mutual funds in Q3. (Inflows of $951 million were more than offset by $1.4 billion in outflows.) Assets under management reached $34.7 billion as of September 30, 2007, an increase of 0.5 percent from $34.6 billion at June 30, 2007.

Janus beat Wall Streeters' earnings per share predictions by 2 cents, reporting an EPS of 29 cents. The company reported net income from of $50.8 million in Q3, down from $51.6 million in the second quarter of 2007. As of September 30, Janus' AUM stood at $208.0 billion, an increase of 9.1 percent, compared with $190.6 billion on June 30, 2007. Janus subsidiary INTECH suffered net outflows in Q3, reporting long-term net outflows of $2.2 billion. Excluding INTECH, Janus’ long-term net inflows were $2.9 billion in the third quarter 2007 versus $1.5 billion long-term net inflows in the previous quarter.

SEI surpassed the analysts expectations with an EPS of 37 cents per share, well above the 33 cents per share that was predicted. Net income was $73.3 million, up from $60.6 million in Q3 of 2006. Assets under management grew by almost $3 billion during third-quarter 2007 to $202 billion.

Franklin Resources fell far short of Thompson analysts' earnings expectations of $1.85 a share, coming in 9 cents below with $1.76 EPS. Franklin's net income dropped off from $468.4 million Q2, to $436.9 million in Q3 of 2007. Assets under management were $645.9 billion as of September 30, 2007.

Federated Investors beat analyst's numbers by 1 cent per share with earings of 57 cents per share for the third quarter of 2007. Federated's results also included a non-recurring investment loss of $2.8 million, after-tax, that had an impact of 2 cents to the quarter's EPS. Income from continuing operations was $57.7 million for Q3 compared to $45.2 million for Q3 2006. Money-market funds raked in the Benjamins this quarter for Federated. Assets increased to a record $190.0 billion at the end of Q3 2007, up $43.2 billion or 29 percent from $146.8 billion at Sept. 30, 2006 and up $17.6 billion or 10 percent from $172.4 billion at June 30, 2007.

Putnam reported a contribution of C$0.017 a share to new parent, Great West's earnings. Asset under management at Putnam were $191 billion at the end of Q3. The acquisition closed on August 2 of this year.

GAMCO (Gabelli) reported earnings of 64 cents a share, below the 69 cents a share expected by analysts. Net income was $18.3 million for the third quarter. AUM for Gabelli's open-ended mutual funds was $9.9 billion as of September 30, 2007, up from $7.9 billion at the end of Q3 2006.

Integrity Mutual Funds, based out of Minot, North Dakota, posted net income of $284,351, or $0.01 per diluted share, compared with a net loss of $118,801, or $0.01 per diluted share, in the year-ago period. Revenues for the third quarter came in at $10.19 million, up 45 percent from last year. Company officials attributed the rise in earnings and revenues primarily to increased commission and fee income in the firm's broker-dealer unit.


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