T. Rowe Price expecting strong 1st-quarter gains

April 08, 1993|By David Conn | David Conn,Staff Writer

T. Rowe Price Associates Inc. expects to see first-quarter revenues rise 15 percent from a year ago, and earnings could be more than 25 percent higher than in the first quarter of 1992, company officials said yesterday.

The expected increases would follow a strong 1992, when earnings rose 18 percent over the year before and shareholders were rewarded with an increased dividend in December, George A. Roche, Price's chief financial officer, told shareholders and employees gathered for the company's annual meeting.

Shareholders were also rewarded in the market as the stock moved up $3.50 a share, or 8.3 percent, during the year, to $45.50.

Early this year, it peaked at $51, but has dropped off since. The stock closed yesterday at $41, down 12.5 cents a share, in trading on the New York Stock Exchange.

Price's top officers also did well in 1992.

The company's proxy statement shows President and Chief Executive Officer George J. Collins was paid $795,000 in salary and bonuses last year -- a 9 percent raise from the year before -- plus options for 6,000 shares. Those options would be worth more than $140,000 if the company's stock price appreciates by 5 percent a year until 2002, which is one of the scenarios the SEC requires companies to calculate in their proxies.

The president of T. Rowe Price Investment Services, James S. Riepe, and Mr. Roche both earned $760,000, up 8 percent from a year earlier, the proxy showed.

Steven Eisman, an analyst at Oppenheimer & Co. in New York, said Mr. Roche's earnings predictions for the company were about the same or a bit lower than Wall Street's expectations.

A 25 percent gain from last year's first quarter would mean earnings of 61 cents a share, while Mr. Eisman said he expected the company to earn 67 cents a share.

Part of this quarter's gain will come because of a drop in advertising spending compared with record spending during the first quarter of1991, Mr. Roche said. He added that the company's growth rate "will moderate in subsequent quarters."

Price, like all top mutual fund companies, has enjoyed a tremendous surge in investments in the past year, much of it from bank depositors frustrated with low rates on savings accounts and certificates of deposit.

"The real interesting part of T. Rowe Price is the defined contribution business," Mr. Eisman said, referring to tax-deferred retirement plans. Price is the mutual fund industry's third-largest administrator of those assets. "So that gives them an interesting earnings story," Mr. Eisman said.

Indeed, Mr. Collins said defined contribution plans have been the fastest-growing segment of mutual fund assets, though "the growth rates are expected to cool off during the next five years."

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