T. Rowe Price posts its best quarter ever

Earnings rise 20% to $53.7 million, or 41 cents a share


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

T. Rowe Price Associates Inc.'s net income climbed 20 percent in the second quarter, and $800 million flowed into its domestic mutual funds, the company said yesterday.

The country's sixth-largest mutual fund company had its best quarter in history, earning $53.7 million, or 41 cents per diluted share, compared with $44.9 million, or 34 cents per diluted share, in the comparable period a year earlier.

Price's earnings beat the estimates of eight Wall Street analysts by a penny, according to Zacks Investment Research.

Revenue rose 11 percent to $246 million, compared with $222.3 million in the comparable period in 1998.

"It was a good strong quarter," said George A. Roche, chairman and president of the Baltimore mutual fund company. "What was especially good was to see the market broaden, and to see the professional money managers turn in good results."

Investors pumped $800 million into Price's domestic mutual funds, which perform better when the overall stock market does well.

Flows into Price's funds suffered in the first quarter because the stock market was largely driven by a small group of stocks, mainly large, blue-chip and technology companies.

However, in the second quarter that ended June 30, more stocks did well, especially small company stocks, and the performances of a number of Price mutual funds improved.

The T. Rowe Price New Horizons Fund, for example, which has $5 billion in assets under management and invests in small growth companies, was down 7 percent in the first quarter, but was up 15.5 percent in the second quarter.

"We were encouraged by the pick-up in domestic stock flows," said John A. Hall, an analyst at Prudential Securities. "It seems that cash flows typically follow performance."

While the money flowed into the domestic mutual funds, about $475 million flowed out of Price's bond and international funds, resulting in net cash inflows of $325 million into Price's funds.

Roche said he expects the money flowing out of bond and international funds to moderate in the coming months.

In all, Price had $159.2 billion in assets under management at quarter's end, up 7.7 percent from a year earlier.

For the first six months of the year, the company made a record $107.2 million, up 24.2 percent from the comparable period in 1998. Earnings per diluted share were 82 cents for the first half of the year, up 24.2 percent from the corresponding period in 1998.

Revenue was up 13.6 percent to $492 million for the period, compared with revenue of $433 million a year earlier.

Operating expenses were up 9.3 percent to $300.9 million for the first half of the year, largely because of compensation costs of $164.4 million.

Roche said that although the economy is strong, he expects it to slow somewhat over the next six months.

Shares of Price closed at $35.25, up 12.5 cents.

Pub Date: 7/27/99

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