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UPDATE 2-AllianceBernstein Q1 profit falls on expenses
May 2, 2011 / 12:05 PM / 6 years ago

UPDATE 2-AllianceBernstein Q1 profit falls on expenses

* Q1 profit 42 cents unit vs. 46 cents year-ago

* Outflows slow since first quarter

* CEO Kraus on turnaround effort: “These things take time” (Adds share price and flow details, analyst and CEO comment, byline)

By Ross Kerber

BOSTON, May 2 (Reuters) - AllianceBernstein Holding LP (AB.N) said first-quarter earnings fell 8 percent compared with a year ago as expenses rose and its funds faced continued outflows.

For the three months ended March 31 the New York asset manager on Monday reported net income of $43.92 million on a diluted basis, or 42 cents per unit, down from $47.86 million, or 46 cents per unit a year earlier.

Shares of AllianceBernstein were up 0.4 percent at $22.29 in early afternoon trading after the results were announced.

AllianceBernstein Holding owns about a third of operating partnership AllianceBernstein LP, with French insurer AXA Group AXA.PA holding most of the rest. Net revenue for the operating partnership rose 4 percent to $755.4 million, compared with a year ago. But expenses rose 5 percent, to $616.9 million, mainly on an increase in compensation costs.

Assets under management were $477.3 billion at March 31, close to the $478 billion where they stood at year-end. Market gains offset nearly all of a net outflow of $14.4 billion the company reported for the quarter, a key metric for asset managers. The outflow figure was smaller than the outflow of $29.3 billion reported in the fourth quarter of 2010.

MAINTAINING “HOLD” RATING

The flows figure was “weak, but mostly known” to investors, wrote Citigroup analyst William Katz in a research note. He maintained his “hold” rating on the stock, which through Friday had fallen 31 percent over the past year, the most of any of its peers.

Improving flows remains the mission of Peter Kraus, named chief executive of AllianceBernstein in 2008 after just a few months as a senior Merrill Lynch & Co. executive amid the financial crisis. Before that he spent 22 years at Goldman Sachs Group (GS.N).

The company has made progress since his arrival, Kraus said on a conference call with analysts on Monday. Changes included growing the company’s fixed-income business to a larger percentage of assets and addng new investment products.

“After 2008 this was a firm that needed to change. We created a more nimble and progressive firm,” Kraus said. “There’s never a quick fix, these things take time.” (Reporting by Ross Kerber, editing by Dave Zimmerman)

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