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Tuesday, October 21, 2008

BlackRock Shares Drop as Profit Declines 15%

By Dunstan Prial

FOXBusiness

Shares of BlackRock Inc. (BLK) fell sharply on Tuesday after the asset management and investment firm said its third-quarter profit fell 15%.

The company said earnings were lower because investors pulled money from various BlackRock investment accounts as the financial crisis intensified.

The company earned $217.7 million, or $1.62 per share, for the three months ended Sept. 30, versus $255.2 million, or $1.94 per share, during the same period a year ago.

Revenue rose 1% to $1.31 billion, up from $1.3 billion in 2007. Analysts polled by Thomson Reuters, on average, were expecting a profit of $1.96 per share, on $1.35 billion revenue.

Investment advisory and administration fees rose 6%, to $1.08 billion, from $1.03 billion last year.

BlackRock investors pulled $41.6 billion from money market funds and $12.2 billion from low fee securities lending portfolios as panic spread after investment bank Lehman Brothers filed for bankruptcy and shares of a prominent money market mutual fund slipped under a dollar, a rarity known as “breaking the buck.”

BlackRock said in a statement that redemptions were partially offset by $13.8 billion of new investments.

“The global capital markets are in turmoil and the credit markets remain largely frozen,” BlackRock Chairman and Chief Executive Laurence D. Fink said in a statement. “Though the first signs of a thaw have emerged, we have a long way to go.”

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