Quarterly profit plunged 32% at Legg Mason

January 18, 1991|By Peter H. Frank

Legg Mason Inc. reported sharply lower earnings for the final three months of last year as worried investors, shying away from Wall Street with the Middle East crisis looming, caused brokerage fees at the company to fall nearly 25 percent.

The Baltimore-based brokerage house and financial-services company said income for its third fiscal quarter, which ended Dec. 31, fell 32.4 percent, to $2.5 million, or 29 cents a share fully diluted, from $3.7 million, or 40 cents a share, a year earlier.

Revenue for the three-month period decreased 11 percent, to $56.6 million from $63.6 million in 1989.

"I am pleased with Legg Mason's results in the latest quarter, which was a very difficult period for the securities industry generally," said Raymond A. Mason, chairman and chief executive of the company, in a prepared statement. "Although our net earnings were lower than in the corresponding quarter a year ago, net earnings in last year's quarter were a record for any quarter in the company's history."

Legg Mason's decline in earnings was another example of the tough times sweeping down Wall Street. Throughout the industry, various firms have been responding to lower investor activity by announcing layoffs and companywide reshufflings.

Accounting for the drop in revenues and earnings at Legg Mason was a 24.8 percent decline in commissions, primarily generated by the company's retail brokerage section. Commission revenues were $19.9 million during the three months, down from $26.4 million a year earlier. Revenues in other areas changed little, Legg Mason said.

Offsetting much of the drop in revenue was a drop in employeexpenses, to $30.8 million from $34.4 million, resulting mostly from a decline in commissions paid to brokers because of the lower sales volume.

"It's a complicated picture because the commission category certainly does indicate a fairly sharp drop in transactions both purchase and sales in individual stocks compared with a year ago," said John F. Curley Jr., vice chairman of Legg Mason. "But it's a mixed picture. There certainly has been less activity in the direct purchase of securities. At the same time, many of the fixed-income transactions and mutual-fund transactions have continued to be pretty healthy."

Legg Mason has more than $10 billion of assets under management.

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