Price's revenue, profit ride the bull to records

$45 million net in 4th quarter caps `a very good year'

Area companies

January 27, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

T. Rowe Price Associates Inc. said yesterday that, boosted by the rising stock market, revenue and net income reached record levels in the fourth quarter and all of 1998.

The Baltimore-based mutual fund company made $45 million in the fourth quarter that ended Dec. 31, up 10 percent from net income of $41 million in the fourth quarter of 1997.

Price made 35 cents per diluted share in the quarter, up 12.9 percent, compared with 31 cents per diluted share from the 1997 period. Revenue rose 13 percent to $235 million in the quarter.

"It was a very good year for the company," said George A. Roche, Price's chairman and president. "Our outlook for the coming year is positive overall, as the economy's fundamentals remain sound."

Annual net income jumped 20.8 percent to $174 million, or $1.34 cents per diluted share, compared with $144 million, or $1.13 per diluted share, in 1997. Revenue was up 17.4 percent to $886 million.

Price beat analysts' estimates for the year by 4 cents a share, according to Zacks Investment Research, which surveyed 10 analysts. The company's shares rose $2.25, to $34.25, yesterday.

Price's mutual fund business continued to perform well despite sharp swings in the stock market from August to October.

Total assets managed by the company rose nearly 19 percent, to $147.8 billion.

Assets managed in its mutual funds were up 16.4 percent to $94.4 billion.

Net cash inflows, which had slowed in the third quarter because of stock market volatility, picked up in the fourth quarter and totaled $3.7 billion for the year. But they were down from inflows of $8.5 billion in 1997.

"We had a huge pick-up in the market, but you did not have a huge pick-up in the cash flows," Roche said.

"Cash inflows usually lag when the market moves," he said.

Operating expenses were up 17.4 percent to $157.8 million in the quarter, and they increased by 17 percent to $573.3 million over the year.

Compensation expenses totaled $304.4 million in the year, up nearly 20 percent from 1997, and advertising and promotional expenses was up 9 percent to $73 million.

Roche expects the economy to slow this year, but he isn't anticipating a recession. Price, he said, should continue to prosper in the low-inflation and low-interest-rate environment.

"In the longer run, these business dynamics and business fundamentals are very strong," Roche said.

"This is still a very good business."

Pub Date: 1/27/99

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