(Bloomberg News) BlackRock Inc., the world's biggest asset manager, said fourth-quarter profit fell 16 percent as market swings eroded fees.
Net income decreased to $555 million, or $3.05 a share, from $657 million, or $3.35, a year earlier, the New York-based company said today in a statement. BlackRock cut 3.4 percent of its workforce in the quarter, after adding 900 employees throughout the year, bringing the total number of employees to about 10,100 as of Dec. 31.
BlackRock, which saw investment advisory fees fall by 4.5 percent to $1.86 billion, joins Northern Trust Corp. in reducing headcount as market volatility and interest rates near zero reduce income. Chief Executive Officer Laurence D. Fink, 59, after expanding into passive products such as exchange-traded funds in 2009, is adding to multi-asset strategies and hedge fund-like mutual funds as investors have turned away from traditional holdings such as stocks.
"The ETF business was their best-performing business in the quarter," Daniel Fannon, an analyst in the San Francisco office of Jefferies & Co., said in an interview. "Earnings were generally better than expected," said Fannon, who had estimated that BlackRock would earn $2.91 per share during the quarter, excluding certain one-time items.
BlackRock's revenue fell 11 percent from a year earlier to $2.2 billion. Performance fees, earned by funds for beating certain benchmarks, decreased 55 percent to $147 million.
Fink Is Bullish
Assets under management at BlackRock declined 1.3 percent from a year earlier to $3.51 trillion, as global stocks fell 9.4 percent last year amid the European sovereign-debt crisis. Assets increased 5 percent compared with the prior quarter.
Fink said during a conference call today with analysts and investors that he expects market volatility to continue in 2012 as lawmakers in Europe struggle to contain the debt crisis and the U.S. faces a presidential election. Fink said he is bullish on global equity markets because of improving balance sheets at corporations worldwide even as investors have fled stocks.
"Corporations in the United States and many cases in Europe have never been stronger," Fink said today. "The amount of de-risking that has been done worldwide, leads me to have, despite all this uncertainty, a more positive overview," Fink said today.
BlackRock fell 1.7 percent to $184.63 at 11:26 a.m. in New York. The shares lost 4.4 percent in the 12 months through Jan. 18, compared with a 21 percent decline in the 20-member S&P index of asset managers and custody banks.
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