UPDATE 2-Franklin Resources profit tops expectations, shares up

Mon Jul 30, 2012 10:49am EDT

* Profit $2.12/share vs Street view $2.04

* Net new flows $4.8 bln vs. $21.7 bln a year ago

* Shares up 2 pct

July 30 (Reuters) - Franklin Resources Inc posted higher-than-expected quarterly earnings on Monday a s the money manager mai ntained its steady investment performance record.

Shares in the San Mateo, California , company were up 2 p ercent to $114.4 6 in m orning tr ading, d espite lower inflows of new cash from investors during the quarter.

"(W)e look for BEN to continue to take market share , reflecting strong long-term investment performance track records" and other factors, Sandler O'Neill analyst Michael Kim wro te in a note to investors.

Nomura analyst Glenn Schorr wrote in another note, "We think the positives . .. a ll outweigh the issues and the stock should do OK."

On an asset-weighted basis, Franklin Resources reported that aside from some equity products, all categories of money it manages were in the top two quartiles of relative performance as tracked by Lipper, a Thomson Reuters unit, over the three- a n d five-year periods ending June 30.

Speaking on a pre- recorded conference call, Franklin Resources Chief Executive Greg Johnson called the A pril-June period "a nother quarter of strong results despite persistent global market headwinds."

He said the company's flagship Templeton Global Bond Fund had s mall net outflows f rom both its U.S. and European versions during the quarter.

Inflows excluding reinvested distributions, or net new flows, t o taxable global fixed-income funds were $2.4 billion in the quarter, Franklin Resources said.

For the fiscal third quarter ended June 30, the company reported net income of $455.3 million, or $2.12 per share, compared with $503.3 million, or $2.26 per share, a year earlier.

Analysts surveyed by Thomson Reuters I/B/E/S had expected $2.04 per share.

Operating revenue fell to $1.78 billion from $1.85 billion. Assets under management slipped to $707.1 billion at June 30 from $725.7 billion at March 31 and $734.2 billion at June 30, 2011.

The asset decline resulted from market depreciation of $22.5 billion, partly offset by net new flows of $4.8 billion from clients, Franklin Resources said.

The net new flows figure -- a crucial measure for money managers -- fell from $5.6 billion in the prior quarter and $21.7 billion a year earlier.

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