2nd UPDATE: Janus 3Q Profit Falls, Stock Down 9.7%
By Ian Salisbury and Tess Stynes, Of DOW JONES NEWSWIRES
(adds more details about third quarter earnings.)
Janus Capital Group Inc.'s (JNS) third-quarter earnings fell by more than
half, still hobbled by a string of controversial management decisions, which
ended up costing the company more than $30 million in the quarter.
The market reacted unfavorably to the report, with shares tumbling 9.7% to $
14.23, as Janus also explained that investors yanked about $2.5 billion from its
Intech unit, which uses mathematical formulas to pick stocks for large
institutions.
On a conference call, Janus executives said outflows reflected poor
performance, particularly at Intech's large-company growth strategies. While
executives argued the weak returns could simply reflect market vicissitudes,
they predicted investors may pull still more money in the future. The outflows
overshadowed smaller gains at the Janus and Perkins units, which together
attracted about $1.9 billion of new money.
Janus said third-quarter earnings were hurt by $20.5 million to settle
lawsuits with former portfolio managers after a long-standing dispute about
whether Janus was honoring the terms of their pay. In what might be a bitter
irony for shareholders, the other major third-quarter expense was for $12.1
million in severance pay to former Chief Executive Gary Black. Black had been
the public face of the company's efforts to rein in manager compensation which
ultimately put Janus in legal jeopardy. A Janus spokesman said Black's departure
had nothing to do with the lawsuits over pay. In a previous statement, Black
addressed his departure saying: "The firm is in a much stronger place when I
joined."
The third-quarter's one-time charges were partially offset by $5.8 million
gain tied to Janus' recent debt tender offer. For the third quarter, the company
reported a profit of $8.2 million, or 5 cents a share, down from $25.4 million,
or 16 cents, a year earlier. The prior-year period includes 12 cents in
investment write-downs and mark-to-market losses. Revenue decreased 17% to $
227.6 million. Analysts polled by Thomson Reuters most recently forecast
earnings of 14 cents on revenue of $225 million.
Assets under management rose 13% to $143.1 billion as of Sept. 30 from a year
earlier, and were up $10.5 billion during the quarter.
-By Ian Salisbury, Dow Jones Newswires; 212-416-2241;
ian.salisbury@dowjones.com and Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com;
(END) Dow Jones Newswires
10-22-091247ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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