Price's Earnings To Drop; The Fund Manager Says Fees Declined
Money manager T. Rowe Price Group Inc. warned investors yesterday to expect a sharp drop in its first-quarter earnings because the stock market's decline sent the value of the firm's mutual funds and the fees it earns on those holdings sharply lower.</br></br>George A. Roche, T. Rowe Price's chairman and president, said first-quarter earnings per share would be about 30 percent lower than the 41 cents per share the company earned for the same period last year. Investment advisory fees dropped 10 percent from the first quarter of last year, Roche said, addressing shareholders at the company's annual meeting in Baltimore.</br></br>The falling stock market is having a direct effect on the bottom lines of mutual fund companies because funds usually charge customers based on a percentage of the dollar value of their investments.</br></br>At Price, the nation's eighth-largest mutual fund family, those fees made up about three-quarters of total revenue last year. It had $140 billion in total assets under management at the end of the quarter, down 12.4 percent from a year ago.</br></br>"Management can't do all that much right now," said Kenneth Worthington, an analyst for CIBC World Markets. "This comes down to market conditions improving and the stock market going up and people putting more money" in mutual funds, he said.