DOW JONES NEWSWIRES
Franklin Resources Inc.'s (BEN) fiscal third-quarter income fell
26% on falling revenue and margins as the fund company - like the
rest of the industry - deals with falling assets under management
from a year earlier.
But earnings handily beat expectations.
The recent improvement in markets bodes well for money managers,
who have been buffeted by the downturn. The industry struggled in
recent quarters as some investors rushed to the sidelines, and
uncertainty remains about who will benefit from Wall Street
consolidation.
Rivals Invesco Ltd. (IVZ) and T. Rowe Price Group Inc. (TROW)
reported steep quarterly declines, though Rowe beat expectations
after the recent stock-market rally boosted the value of the assets
it oversees.
For the period ended June 30, Franklin posted income of $297.7
million, or $1.29 a share, down from $403.3 million, or $1.71 a
share, a year earlier. Revenue decreased 29% to $1.07 billion as
investment management fees slid 32% and assets under management
fell 22% to $451.2 billion.
Analysts polled by Thomson Reuters expected earnings of 87 cents
and revenue of $1.01 billion.
Operating margin fell to 30% from 35%.
Assets under management rose 15% from the prior quarter as fund
inflows were $6 billion, compared with $1.2 billion a year earlier
and outflows of $5.5 billion in the prior quarter. Equity holdings
were 46% of total assets, compared with 55% and 44%, respectively,
while fixed-income assets were 33% of total assets, compared with
25% and 35%.
Franklin's shares closed Wednesday at $80.42 and haven't traded
premarket. The stock is up 26% this year.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com