Legg Mason reports profit, restructuring, share buyback

BOSTON (Reuters) - Money manager Legg Mason Inc (LM.N) reported a profit in its fiscal fourth quarter, and outlined several long-awaited structural changes and job cuts it said will save $130 million to $150 million annually by the fourth quarter of fiscal 2012.

Legg Mason also said on Monday that its board has authorized the repurchase of $1 billion worth of common stock.

Its shares rose 1.8 percent in after-hours trading to $30.50 from $29.95 in regular trading on the New York Stock Exchange.

For the three months ended March 31, Baltimore-based Legg Mason reported a profit of $63.6 million, or 39 cents per share, compared with a loss of $330 million, or $2.33 per share, in the same period a year ago.

Analysts had expected the company to earn 35 cents per share on average, according to Thomson Reuters I/B/E/S.

Assets under management were $684.5 billion at the end of March, up from $681.6 billion at December 31 and $632.4 billion a year ago.

Legg Mason Chief Executive Mark Fetting outlined on Monday a series of strategic steps. Many investors had expected changes following the addition of activist investor Nelson Peltz to the company's board last year.

Among other things, Legg Mason will move some back-office functions to its affiliated investment firms, and eliminate about 350 jobs over 12-18 months, the company said. The cuts amount to just under 10 percent of its workforce currently at 3,600 people overall, Fetting said in an interview. It expects to incur up to $210 million in transition costs and to add up to 8 percent to its operating margin.

Jefferies & Co analyst Dan Fannon said the buyback will be seen positively but that he was curious how Legg Mason's affiliated investment firms would react to the restructuring since they will now get more operational duties. "It's surprising to me the affiliates would want to do this, because they're not getting much out of it," he said.

The streamlining will not affect investment areas, Fetting said on a conference call with analysts.

In an interview, Fetting said the affiliates were in on the planning for the changes, as was the board. The restructuring plans were under way even before Peltz became a director, he said.

"This was the reason why the basis of discussions with (Peltz's investment company) Trian were as constructive as they were," he said.

(Reporting by Ross Kerber; Editing by Tim Dobbyn; Editing by Phil Berlowitz)