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