Janus, weighed down by costs of departures, sees profts drop
Costs tied to the July exit of ex-CEO Gary Black and departures of other employees totaled $32.6 million, Janus said.
By Associated Press
October 22, 2009, 1:37 PM EST
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Janus Capital Group Inc. said Thursday its third-quarter profit shrank by more than two-thirds, weighed down by legal settlements and severance costs from the departure of the mutual fund company's former CEO and other employees.
The news sent Janus shares diving about 10 percent in morning trading.
Janus reported net income of $8.2 million, or 5 cents per share, down from a profit of $25.4 million, or 16 cents per share, in the same quarter a year ago.
Costs tied to the July exit of ex-CEO Gary Black and departures of other employees totaled $32.6 million, Janus said. Included in that total were $20.5 million from legal settlements, primarily linked to compensation for departing employees.
The latest quarter's legal and severance charges were partly offset by a gain of $5.8 million from an offer to repurchase debt.
Revenue fell 17 percent to $227.6 million from $275.4 million in the year-ago period, primarily because last year's plunging markets eroded the value of assets Janus manages, reducing management fees. However, revenue climbed nearly 14 percent from this year's second quarter, driven by recently rising markets.
Analysts surveyed by Thomson Reuters, whose estimates typically exclude one-time items, had forecast a profit of 15 cents per share in the latest quarter on revenue of $225.3 million.
Average assets under management rose 12.9 percent to $143.1 billion from $126.7 million in this year's second quarter. Rising market prices contributed $20 billion to the gain in assets, but was partly offset by about $600 million that flowed out of Janus' long-term funds during the latest quarter.
Janus is currently led by interim CEO, Tim Armour. When his appointment was announced in July, Janus said it would search for a permanent successor to Black, who resigned under what the company called a "mutual decision."
Shares of Janus fell $1.58 to $14.17 in morning trading. The stock has ranged from $3.73 to $16.06 over the past year.
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