State Street 4Q Net Tumbles 71% On Charges, Sees Flat 09

   DOW JONES NEWSWIRES 
 

State Street Corp.'s (STT) fourth-quarter net income slid 71% on steps the asset manager took to shore up some funds and restructuring charges, as flat results are expected for 2009.

That forecast, which compares with 2008's $5.21 and the $4.71 expected for 2009 by analysts surveyed by Thomson Reuters, is below the company's long-term goal of 10% to 15% growth. Revenue is also seen being unchanged, compared with State Street's 8% to 12% goal and the 3% drop projected by analysts.

Shares tumbled 29% premarket to $25.99. The stock has lost half its value the past four months.

The parent of State Street Global Advisors reported net income of $65 million, or 15 cents a share, down from $223 million, or 57 cents a share, a year earlier. Operating earnings, which excluding the fund moves and restructuring charges in the latest quarter, fell to $1.18 from $1.38.

Revenue rose 7.8% to $2.67 billion as net interest revenue surged 42% as continued declines in the Fed Funds rate lowered funding costs. That more than offset weakness in declines of servicing revenue and management fees.

Analysts were looking for earnings of $1.14 a share on $2.42 billion in revenue.

Unrealized mark-to-market losses at State Street's investment portfolio more than doubled during the quarter to $6.3 billion, which State Street blamed on the ongoing market illiquidity. The figure dropped by $400 million as of Friday.

State Street, which has been trying to cut costs along with other financial-services companies, last month said it would reduce its global work force by about 6%, or 1,600 to 1,800 employees, citing current market conditions. The money manager expects annual savings of $375 million to $400 million.

As part of the U.S. Treasury's capital purchase program, the Treasury bought stakes in State Street and is investing $2 billion in the money manager. State Street, which provides large financial institutions safekeeping for stocks and assets, was also hired to serve as a custodian in the government's efforts to revitalize the markets.

-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310; [e-mail]

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