Price garners record profit Per-share earnings, however, fall short of projected numbers

Investing

April 27, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

The robust stock market, coupled with a continued surge of money pouring into mutual funds, lifted T. Rowe Price Associates Inc.'s first-quarter profits 36 percent to a record $20.4 million, the company said yesterday.

The gain came on a similar increase in revenues, which rose 35 percent to $132.4 million in the first quarter.

Despite the record results, the per-share earnings of 66 cents fell short of the 68 cents expected by analysts surveyed by Zack's Investment Research.

T. Rowe Price's stock fell 25 cents to close at $56.75.

Assets the company manages shot up to $82 billion in the quarter, marking a $20.4 billion increase from a year ago.

The company added $6.6 billion in assets alone in the first three months of the year.

"We've had extraordinary growth in assets under management because of the continued record-setting pace of cash flow into ++ the mutual funds," said Steven Norwitz, a company spokesman.

One reason that assets have increased so dramatically is that more than 25 new clients with 401(k) plans have brought about $1 billion to the company this year, Mr. Norwitz said.

Nearly $3.2 billion flowed primarily into T. Rowe Price's stock mutual funds during the quarter, equal to 84 percent of 1995's total, and 81 percent of the record $3.9 billion it took in in 1993.

Mr. Norwitz said that the company has surpassed the 1993 record if April figures are included in the total.

He said that more than $4 billion has come into its stock and bond funds in the first four months of the year. Even Price's international funds are growing briskly. Assets managed by Rowe Price-Fleming International, rose by $2.5 billion in the quarter to $24.7 billion.

The growth in earnings and revenues was accompanied by a 36 percent rise in operating expenses.

Advertising and promotional expenses more than doubled to $16.1 million in the quarter compared with a year ago.

"That is exactly the kind of expenses we like to see," said Mark Constant, an industry analyst in San Francisco with Merrill Lynch & Co. "They're investing in tomorrow's earnings."

Mr. Constant said Price executives "recognize times are exceedingly good right now, and they are in position to really leverage a unique franchise. They are doing what they need to do to stay on top."

Pub Date: 4/27/96

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