* EPS of $0.36 vs. $0.59 a year earlier
* Total revenues of down 3 percent to $127 mln
* Shares up 0.4 pct
(Updates stock price. Adds comments from analyst call.)
By Joe Rauch
CHARLOTTE, N.C., July 21 Piper Jaffray Cos
Inc's (PJC.N) second-quarter profit fell short of expectations
as sluggish trading and institutional businesses overshadowed a
spike in investment banking revenue.
Net income fell 36 percent to $7.4 million, or 36 cents per
share, from $11.6 million, or 59 cents per share, a year
Analysts had projected earnings of 49 cents per share,
according to Thomson Reuters I/B/E/S.
Net revenue declined 3.5 percent to $127.7 million, while
analysts had expected $129.0 million.
Piper Jaffray benefited from the resurgent market for
initial public offerings, which accelerated through the spring
and early summer. But its institutional business suffered as
clients became less aggressive in a sluggish stock market.
The smaller firm, which caters to mid-size clients, said
investment banking revenue increased 14 percent from a year
earlier to $72.3 million and was up 64 percent from the first
Piper Jaffray particularly benefited from smaller IPOs
conducted during the quarter.
This quarter, the company completed 28 equity financings
totaling $3.5 billion, 11 merger and acquisition deals valued
at $4.6 billion and 121 tax-exempt issuances totaling $1.6
But the company's trading and brokerage businesses that
cater to institutional clients dragged.
Total institutional sales and trading declined 43 percent
to $37.2 million from $65.5 million.
The dip in the company's institutional business is expected
to continue, Chief Executive Officer Andrew Duff said during
the conference call with analysts, because of the challenges
U.S. municipalities are facing as they issue debt.
"The primary driver of revenues for them is real-estate
related taxes based on assessed valuations," he said. "Our view
is the marketplace is shifting regularly."
New debt issuances, he said, were relatively flat for the
first half of 2010.
"All issuers have been able to access the market, but the
secondary trading and credit spreads have been volatile," Duff
Total compensation declined 2 percent from a year earlier
to $77.6 million from $79.3 million, but was up 10 percent for
the first half of 2010 over last year.
Chief Financial Officer Debbra Schoneman said the company
expects its compensation ratio to remain around a previously
disclosed 60 percent target for the year.
Piper Jaffray shares were up 11 cents to $30.33 on the New
York Stock Exchange. The company's stock dropped 20 percent
during the second quarter, falling further than industry rivals
such as Raymond James Financial Inc (RJF.N), whose stock fell 8
(Reporting by Joe Rauch, editing by Lisa Von Ahn and Derek