Price reports record quarter

Booming market helped company to its best year ever

January 27, 2000|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

T. Rowe Price Associates Inc. said yesterday that a soaring stock market propelled revenue, net income and earnings per share to records both in the fourth quarter and for all of 1999.

The Baltimore-based mutual fund company and asset manager reported net income of $70 million for the three months that ended Dec. 31, up 56 percent from $45 million in the fourth quarter of 1998.

Earnings per diluted share were 55 cents, up 57 percent from the 35 cents earned a year earlier.

Revenue rose 21 percent to $285 million in the quarter.

"T. Rowe Price clearly benefited from the strong equity markets," George A. Roche, Price's chairman and president, said in a written statement yesterday.

"Our diversified lineup of investment offerings and positioning in the marketplace also bode well for continued growth in the new millennium," Roche said.

For the year, net income jumped 37.4 percent to $239 million, or $1.85 cents per diluted share, compared with $174 million, or $1.34 per diluted share, in 1998.

Revenue was up 17 percent to $1.04 billion, the first time Price's annual revenue surpassed $1 billion, the company said.

Price beat analysts' estimates for both the quarter and the year by a dime a share, according to Nelson Information, which surveyed 10 analysts. The company's shares closed at $42 yesterday, off 37.5 cents.

Price's annual and quarterly growth is impressive, but its heavy investment in international stocks vs. technology stocks may have hampered its growth, said Mark Constant, analyst with Lehman Brothers in San Francisco.

Price is one of the largest managers of international funds.

"T. Rowe Price is clearly a beneficiary of a strong market, but perhaps less so than other equity managers," Constant said.

International stocks "really wasn't the place to be in 1998 and 1999," he said, noting that technology funds did much better last year.

"But, if the market teaches us one thing, it's that nothing lasts forever," Constant said.

Total assets managed by T. Rowe Price rose nearly 22 percent, to $179.9 billion. Assets managed in the company's mutual funds increased 21.3 percent to $114.5 billion.

Operating expenses were up 7.2 percent to $169.1 million in the quarter, and they increased by 8.4 percent to $621.6 million for the year.

Last year, Price became the second money-management stock included in the Standard & Poor's 500 index, a benchmark for U.S. stocks.

"We anticipate further, though more modest, growth for the firm in 2000," Roche said.

"The stock market returns of the past five years are not sustainable over the long-term, which makes us cautious in our outlook for 2000."

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