BlackRock Inc ., the giant money management firm, reported weaker-than-expected quarterly earnings as its quantitative and cash management funds businesses saw outflows.
BlackRock shares were down as much as 8.8 percent as investors focused on the weaker-than-expected earnings as well as weaker-than-forecast revenue numbers even as overall profits more than quadrupled with the addition of Barclays' former exchange-traded funds business.
BlackRock, on an adjusted basis, earned $469 million, or $2.40 a share, compared with a year before, when the asset manager earned $110 million, or 81 cents a share.
Analysts were expecting BlackRock to earn $2.45 a share, according to Thomson Reuters I/B/E/S. The adjusted figure does not include some costs and one-time items management contends should be ignored.
On a generally accepted accounting principles, or GAAP, basis, BlackRock earned $423 million, or $2.17 a share, compared with $84 million, or 62 cents a share, a year earlier.
Revenues also fell short of what analysts were expecting. For the quarter, BlackRock revenue was $2 billion, up 102 percent from the prior-year quarter but short of the $2.2 billion analysts were expecting.
QUANT FUNDS SEE OUTFLOWS
It is hard to compare BlackRock on a year-to-year basis because the current results were greatly enhanced by the addition of the big exchange-traded funds business the firm acquired late last year from Barclays Plc .
The first-quarter results were the first to include all revenues and assets under management assumed by BlackRock in that blockbuster deal, which turned the New York firm into the world's largest money manager.
In the quarter, BlackRock reported net outflows of $8.8 billion from its quant funds.
Cash management funds, which are largely money market funds, were hit hardest by investor redemptions. The firm said net outflows from cash-related investment products was $39.6 billion.
While our record is not unblemished, we have achieved strong investment performance across much of our platform, said BlackRock Chief Executive Officer Laurence Fink, in a prepared statement.
Calyon Securities analyst Christopher Spahr said while earnings came in a touch below expectations, much of what contributed to the miss is either easily fixable or to some degree not surprising.
He said outflows in BlackRock's quantitative funds, which rely on mathematical models to predict stock movements, is more of a reflection that quant funds are a bit out of flavor for the moment. Spahr also said, analysts are still trying to get their arms around what BlackRock will look like with the addition of Barclay's big ETF business.
A strong performer were fixed-income index funds, which took in $13.6 billion in net new money in the quarter. BlackRock said included in that figure was $7.1 billion for iShares funds, which the firm acquired in the Barclays deal.
(Reported by Matthew Goldstein, editing by Gerald E. McCormick, Dave Zimmerman)