Franklin Resources 1Q Net Plunges 77% As Assets Shrink

Franklin Resources Inc.'s (BEN) fiscal first-quarter net income plunged 77% as assets under management and revenue dropped sharply amid the stock market's plunge.

Generally, tough times were seen for money-management firms in the quarter, as the financial crisis picked up steam amid falling asset values, investor redemptions from mutual funds and declining profit margins. But Keefe Bruyette & Woods analyst Robert Lee said two weeks ago that Franklin has a lot going for it, including its diversified product line, competitive performance of its funds and global distribution.

For the quarter ended Dec. 31, the mutual-fund manager reported net income of $120.9 million, or 52 cents a share, down from $518.3 million, or $2.12 a share, a year earlier.

Revenue slumped 42% to $969.3 million as investment-management and underwriting fees slumped.

Analysts polled by Thomson Reuters were looking for earnings of 85 cents a share on revenue of $1.05 billion.

In recent trading, shares of Franklin were up 1.5% at $53.91. The stock has lost half its value the past four months.

Assets under management were $416.2 billion as of Dec. 31, down 35% from a year earlier and 18% from the prior quarter. Equity assets comprised 47% of the total, down from 59% and 52%, respectively.

Last week, Franklin announced it would cut 4% of its global work force, or about 350 of its 8,600 employees. The cuts came on top of a 2% headcount reduction announced in October.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]

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