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BlackRock profit falls 16% but new investor cash rises

The BlackRock logo is seen outside of its offices in New York January 18, 2012.

SHANNON STAPLETON/SHANNON STAPLETON/REUTERS

BlackRock Inc. , the world's largest money manager by assets, said fourth-quarter net income fell 16 per cent as revenue and managed assets declined, but it also drew new investor cash.

Amid volatile markets and a shift of assets away from traditional equity funds, several analysts described the New York company's results as satisfactory.

Nomura's Glenn Schorr called the results "clean and solid" in a note to investors. The inflows gave the company "a solid 3.1 per cent organic growth rate in a very tough backdrop," he added.

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Net income fell to $555-million (U.S.), or 3.05 per share, from $657-million, or $3.35 per share, a year earlier.

Adjusted for taxes, restructuring and other items, earnings were $3.06 per share. On that basis, analysts on average had expected $2.99, according to Thomson Reuters I/B/E/S.

Assets under management at Dec. 31 were $3.51-trillion, down from $3.56-trillion a year earlier.

Revenue fell 11 per cent to $2.2-billion, reflecting lower fees from investment advisory work and administration fees because of the lower assets under management.

Also contributing to the revenue decline was a fall-off in performance fees by more than half, to $147 million in the fourth quarter, mainly because of lower performance fees on hedge funds.

Jefferies & Co analyst Dan Fannon said in a note to investors that he had expected an even sharper drop in performance fees, to $75-million. The difference was a major reason for the earnings beat, he said.

Although total assets fell from a year earlier, they were up 5 per cent from the end of the third quarter. The increase reflected a $143.3-billion improvement in market and investment performance as stock indexes rose, and an inflow of $23.8-billion of new investor cash to BlackRock long-term products like equity and bond funds.

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The net inflow is likely to capture attention at a time when other, smaller asset managers are expected to report net outflows of investor cash with their earnings next week.

BlackRock Chief Executive Officer Laurence Fink has pushed hard to diversify the company into areas lines like exchange-traded funds. Its iShares ETF business had an inflow of $20.1-billion in the quarter.

"Our results reinforce the underlying strength and momentum of our diversified client-focused model," Mr. Fink said in a statement.

BlackRock said it had taken a $32-million restructuring charge for a 3 per cent cut in its workforce in the quarter. It had about 10,100 employees as of Dec. 31, roughly 900 more than a year earlier.

Sent: 2012-01-19 09:08:18 (EDT)

(c) Copyright Thomson Reuters 2012. Click For Restrictions - http://about.reuters.com/fulllegal.asp

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