Price Reports Record Income

1st-quarter Profit Rose 40%, Revenue Up 27%, Mutual Fund Firm Says

April 29, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

Despite large swings in the stock market, T. Rowe Price Associates Inc.'s net income jumped 40 percent and revenues were up 27 percent in the first quarter, the company said yesterday.

The Baltimore mutual fund concern reported record revenue of $168 million in the first quarter ended March 31, compared with $132.4 million for the same period a year earlier.

Net income jumped to a record $28.5 million, or 45 cents a share, compared with $20.4 million, or 33 cents a share, on target with analysts' expectations.

"It was a very solid quarter, you can't say enough," said Bruce R. Brewington, an analyst with Putnam Lovell & Thornton of San Francisco. "If this is any indication of what is going to happen in 1997, they are going to have another bang-up year."

Brewington expects net income for the full year to be up 15 percent over 1996's record $98.5 million.

Shares of Price closed at $39.125, down 50 cents.

George A. Roche, Price's newly elected president and chairman, said money from investors continued to flow into its mutual funds.

"By and large, the inflows have remained very good," said Roche, successor to George J. Collins, who retired as president and chairman slightly more than a week ago.

However, Roche said there is "some hesitation" by investors to put more money into stocks and mutual funds because they are concerned that the Federal Reserve will raise interest rates when it meets next month.

The Fed raised short-term interest rates last month to keep a lid on inflation and cool down the stock market.

"The short-term outlook for the financial markets remains uncertain due in part to the Federal Reserve's recent tightening of monetary policy," Roche said. "How- ever, at this time, we still expect that 1997 will be another good year for the company."

Price's total assets under management passed $100 billion for the first time in its 60-year history, and closed the first quarter at $102.9 billion, up $3.5 billion from Dec. 31, 1996.

The assets under management were up $20.9 billion from the first quarter a year earlier.

Price's mutual funds grew to $66.7 billion in assets under management, up $2.3 billion from December and $13.2 billion from a year ago.

Net cash inflows to Price's funds jumped nearly $3.4 billion in the quarter, more than $200 million greater than the previous record set a year earlier.

Expenses rose 21.5 percent in the quarter to $113.6 million. Compensation increased to $54 million, up 29 percent from a year; and advertising and promotion rose to $17.5 million, an increase of 8.7 percent.

Price employs 2,650 people, up more than 30 percent in the last 12 months.

Roche said the company would continue hiring this year, but he didn't know how many people would be added.

Many of the new employees work in customer service and as support staff.

Pub Date: 4/29/97

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