July 20, 1999 15:09
FOCUS- DLJ beats estimates with record profit
(adds byline, stock price, analyst's comment)
By Jack Reerink
NEW YORK, July 20 (Reuters) - U.S. investment bank Donaldson Lufkin &
Jenrette on Tuesday posted a 16 percent increase in quarterly profit to a record
$165.7 million, beating analysts' estimates as revenues in all its key
businesses hit new highs.
DLJ earned $1.14 per diluted share in the second quarter. That compared with
a $142.3 million profit, or $1.05 a share, in the year-ago quarter and solidly
beat analysts' expectations of 84 cents a share. Net revenues rose to a record
$1.43 billion, up 21 percent from $1.18 billion a year ago.
"These record results underscore the powerful franchises that DLJ has
established in serving the needs of corporations, institutions and individual
investors in the United States and abroad," said DLJ's chief executive, Joe
Roby, in a statement.
DLJ's strong results followed a string of record profits posted by Wall Street
firms and brokerages in the second quarter. The securities industry is thriving
on strong stock markets worldwide and a continued flood of corporate mergers
and acquisitions (M&A).
"DLJ is clearly running on all cylinders," commented analyst Michael Flanagan
of Financial Service Analytics. "The company has proven itself to be one of the
best-managed in the industry and chooses its niche markets carefully."
The firm's stock price gained $1.25 to $52.69 in mid-morning trading on the
new York Stock Exchange.
DLJ, which is majority-owned by financial services firm Equitable Cos. , earned
a record $332.7 million in M&A fees in the quarter, up 4 percent from $318.4
million a year ago. The firm, which advised Italy's Olivetti in its $35 billion
hostile takeover of Telecom Italia , ranked fifth in global deal volume in the first
half, up from 10th in the year-ago period.
Gains from making markets in stock and bonds hit a record of $218.4 million,
up more than five-fold from $39.9 million a year ago. DLJ, however, said the
quarters were not comparable because the firm quit trading emerging markets
securities after suffering steep losses in the third quarter of last year.
DLJ also received a record $409.5 million in quarterly fees from helping
companies raise money in capital markets through debt or stock offerings.
That was up 19 percent from $343.1 million in fees a year ago.
Commission income also hit a high at $291.1 million in the quarter, up 44
percent from $201.9 million a year ago. DLJ's Financial Services Group, which
through its Pershing subsidiary provides trade processing for smaller
brokerages, posted a 58 percent increase in pretax profits, DLJ said.
DLJ's overseas revenues rose to $300 million in the first half, up 77 percent
from a year ago and already more than the firm's total revenues from outside
the United States last year.
The investment bank's online unit, DLJdirect , more than quadrupled its
quarterly net income to $5.1 million, as it processed more stock trades and
opened more accounts. DLJ in May raised $343 million when it sold investors
a special class of a stock in the unit that tracks DLJdirect's performance.
((--Jack Reerink/Financial Services Desk (212) 859-1725--))
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