Investment firm loses $3.1 million Declining stock prices hurt Alex Brown in 3rd quarter.

October 23, 1990|By Ross Hettrick | Ross Hettrick,Evening Sun Staff

Hit by declining stock prices, Alex. Brown Inc., the Baltimore-based investment firm, lost $3.1 million, or 21 cents per share, during the third quarter compared to earnings of $6.3 million, or 38 cents per share, for the 1989 third quarter.

The company also announced a quarterly dividend of 7 cents per share -- unchanged from the previous quarter -- payable on Nov. 14 to stockholders of record on Nov. 5.

Revenues were $58 million compared to $79.6 million in the 1989 third quarter.

While revenue was off 27 percent for the quarter, Alex. Brown President Donald B. Hebb Jr. characterized commissions as "strong" and investment banking revenue as "good." But the firm "experienced significant declines" because of the falling value of specific stocks held in its inventory, he said in a company statement. One of these stocks was from a recent offering where Alex. Brown was a managing underwriter. Alex. Brown did not disclose the name of the company that was involved in that offering.

The company generally keeps about $80 million to $90 million in its stock inventory, according to Beverly L. Wright, the company's chief financial officer.

The pace of business slowed in the later part of the quarter because of concerns about war with Iraq and a possible recession, Hebb said.

"Concerns about the strength of the securities market as a whole remain as we begin the fourth quarter, but we are confident that this market also provides significant investment opportunities," Hebb added.

For the first nine months, the company had a net income of $3.9 million, or 25 cents per share, compared to earnings of $4.3 million, or 26 cents a share, for the same period a year ago.

Revenues for the first nine months were $203 million compared to $210.5 million for the same period a year ago.

The company also repurchased about 600,000 shares of its common stock during the third quarter as part of its stock repurchase program. The program has been expanded and the company is authorized to buy back up to 1 million shares.

Also today, T. Rowe Price Associates Inc., a Baltimore-based mutual funds company, announced its earnings fell in the third quarter. Hurt by additional operating expenses, net income dropped about 14 percent to $6.7 million, or 45 cents per share, compared $7.7 million, or 52 cents per share, for the 1989 third quarter.

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