500...BlackRock Net Falls 84% on Job Cuts; Assets Rise
By Sree Vidya Bhaktavatsalam
Jan. 21 (Bloomberg) -- BlackRock Inc., the largest publicly traded U.S. money manager, said fourth-quarter earnings fell 84 percent as the bear market forced the firm to cut jobs and mark down the value of hedge-fund investments.
Net income declined to $53 million, or 40 cents a share, from $322.4 million, or $2.43, a year earlier, the New York- based company said today in a statement. Excluding some items, BlackRock said profit was 68 cents a share, below the average estimate of 99 cents of 10 analysts surveyed by Bloomberg, sending the stock down as much as 6.4 percent.
BlackRock’s assets rose 3.9 percent in the quarter to $1.31 trillion, helped by U.S. government contracts to oversee toxic securities from American International Group Inc. Still, the worst market declines in seven decades pushed assets down 3.6 percent from a year earlier, eroding management fees. Results also included $293 million of writedowns on the value of hedge funds and private equity-funds in which BlackRock invests along with customers.
“The kind of hits they took in their co-investments were huge,” Gary Gordon, an analyst with Portales Partners LLC in New York, said in an interview. “It was obviously the worst quarter for asset managers in U.S. history, and they suffered,” said Gordon, who rates BlackRock as a “buy.”
BlackRock’s earnings included $38 million in costs to cut 500 jobs, or 9 percent of its workforce, in the first layoffs in its 20-year history. The stock rose $5.06, or 4.9 percent, to $108.50 at 4:03 p.m. in New York Stock Exchange composite trading as financial stocks recovered from yesterday’s selloff. BlackRock earlier traded as low as $96.19.
bloomberg.com |
