T.Rowe Price net up 33 percent; inflows miss some views

Wed Oct 24, 2012 10:12am EDT

(Reuters) - Fund manager T. Rowe Price Group (TROW.O) said on Wednesday third-quarter profit jumped 33 percent, including one-time investment gains, as rising assets drove up fees and helped it beat Wall Street expectations.

The Baltimore company also reported net inflows of $4.3 billion during the quarter, a key metric for asset managers, showing investors still putting money into its mutual funds.

Some analysts had expected even more inflows, however, and "might be a little bummed" about the $4.3 billion figure, Nomura analyst Glenn Schorr wrote in a note to investors. T. Rowe Price shares see-sawed in early trading.

T. Rowe Price Chief Executive James Kennedy said in an interview the inflows reflected solid fund performance and were about evenly split between its equity funds and bond products.

"It's another boring quarter from T. Rowe Price. We continue to perform well, and we continue to control our expenses," he told Reuters.

The company reported third-quarter net income of $247.3 million, or 94 cents a share, up from $185.5 million, or 71 cents per share, a year earlier.

Revenue rose to $769.7 million from $679.4 million, mainly because higher assets drove up fees.

Assets under management at September 30 were $574.4 billion, compared with $541.7 billion at June 30. In addition to the inflows, market appreciation and investment income boosted assets by $28.4 billion.

The company's latest results included one-time investment gains from a sale of assets to raise cash to seed a pair of new funds in Europe.

Those sales resulted in an after-tax gain of 7 cents per share. Even excluding that gain, earnings still beat Wall Street expectations of 84 cents a share.

T. Rowe Price shares traded as low as $63.86 and as high as $65.58 in early dealings, and were last down 15 cents at $64.55. The shares have outpaced some rivals in the past year as the company has posted steady inflows to its mutual funds, and on enthusiasm for its operations in growing overseas markets.

On key issues facing markets, Kennedy said he is "cautiously optimistic" that progress will be made on European debt issues. He also said that after the U.S. elections next month it will be easier for political leaders to make deals on budget issues.

"Most politicians have heard from the people of America that we want a deal. We don't need a huge austerity program but rather a deal that keeps the economy going. It needs to attack the deficit. If they come up with a program like that, confidence across the U.S. would rise dramatically," he said.

(Reporting by Ross Kerber; Editing by Bernadette Baum and John Wallace)

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