Lazard earnings surge on merger advisory fees

By Dan Wilchins

NEW YORK (Reuters) - Merger advisory firm Lazard Ltd (LAZ.N: Quote, Profile, Research, Stock Buzz) on Wednesday said its fourth-quarter earnings rose 43 percent, beating estimates, on increased merger advisory fees.

The company also renewed Chief Executive Bruce Wasserstein's contract for five years, and boosted its quarterly dividend.

Lazard focuses on generating merger advisory, restructuring, and asset management fees and does little trading of its own funds. That business mix has insulated the company from the massive writedowns that many other Wall Street firms faced in recent quarters.

But the credit crisis is slowing merger activity globally, which over time could show up in Lazard's results. Lazard earns fees when deals are closed, and, in general, fewer new mergers are being announced, and fewer announced transactions are closing.

Just over $180 billion of merger transactions have closed in 2008 so far worldwide, down from over $265 billion in the same period last year, according to Dealogic.

The timing for deal closings could be less predictable in the near term, said Vice Chairman Steven Golub in an interview.

"The short-term timing could be erratic, but we still see a lot of opportunities," Golub said, adding that restructuring activity is showing signs of picking up.

Net income was $122.6 million, or $1.04 a share, from $85.8 million, or 78 cents, a year earlier. Lazard's operating revenue in the fourth quarter rose 26 percent to $618 million.