Price's profit up 33% $44.9 million earned in record 2nd quarter


July 22, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Despite some bumps in the stock market, T. Rowe Price Associates Inc.'s net income shot up 33 percent to a record $44.9 million in the second quarter, the company said yesterday.

Price made 34 cents per diluted share in the quarter that ended June 30, up 26 percent from 27 cents per diluted share in the corresponding period a year earlier.

Revenue rose to a quarterly record of $222 million, 23 percent more than in the 1997 quarter.

Despite the strong showing, the Baltimore-based mutual fund PTC company fell short of some analysts' expectations.

The results were a "slight disappointment," said John A. Hall, an equity analyst at Baltimore-based BT Alex. Brown Inc. While he had expected Price to make 35 cents a share, Hall is still recommending the stock as a "strong buy."

"It was another record quarter; they showed good net cash inflows into mutual funds," Hall said.

In the first half of the year, Price made a record $86.2 million, or 66 cents per diluted share, up 38.4 percent from the 1997 period. Revenue rose 24.4 percent to a high of $433 million.

"Our results reflect continued strength in the financial markets, despite a minor stock market correction from the highs reached in May," said George A. Roche, Price chairman and president. "Against an ongoing backdrop of relatively low interest rates and subdued inflation, we are optimistic about the prospects for the remainder of the year."

Money managers such as Price are having a bang-up year, largely because of the strong stock market. Last week, Baltimore-based Legg Mason Inc. said its revenue rose to a record $248.7 million in its first quarter, up 33 percent from the year-earlier period. Legg's net income surged to a record $24.4 million, up nearly 50 percent. Price and Legg are experiencing strong flows of money from investors.

Total assets managed by Price jumped to $141.9 billion in the first half of the year, up $25 billion from the corresponding time a year earlier. Assets managed in Price mutual funds rose to $91.4 billion, up $16.1 billion from a year earlier.

As of July 19, fund assets had risen nearly $3 billion since June 30, including net cash inflows of about $430 million, the company said.

Price's expenses increased 20 percent to $140.6 million in the quarter. Compensation costs rose nearly 22 percent to $75.9 million in the quarter, and advertising costs rose 24 percent to $17 million.

Looking ahead, Roche said he expects interest rates to remain stable but possibly decline slightly as the "economy remains on a positive track but cools from its recent heated performance."

"In this environment, stocks and bonds should continue to provide attractive returns, although fallout from Asia could slow domestic earnings growth and temper stock market performance somewhat," Roche said.

Pub Date: 7/22/98

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.