BlackRock's 2Q profit falls 20% to $218M

Investment manager BlackRock Inc. said Tuesday its second-quarter profit tumbled 20 percent, but its earnings still surpassed analysts' expectations. Net income for the quarter ended June 30 fell to $218 million, or $1.59 per share, compared with earnings of $274 million, or $2.00 per share, during the same quarter last year. Adjusted income — which excludes special one-time charges such as certain compensation costs and professional fees as well as charges tied to the planned acquisition of Barclays Global Investors — totaled $239 million, or $1.75 per share, during the second quarter. Analysts polled by Thomson Reuters, on average, forecast earnings of $1.58 per share for the quarter on revenue of $1 billion. Analysts do not always include special charges in their estimates. BlackRock's revenue fell 26 percent to $1.03 billion during the quarter, from $1.39 billion during the year-ago period. Revenue fell primarily due to declines in investment advisory and administration base fees. Investment advisory and administration fees fell 27 percent to $850 million during the second quarter, from $1.16 billion during the same quarter last year. The decline was mostly due to a reduction in equity and alternative assets under management. However, investment advisory and administration base fees increased 6 percent when compared with the previous quarter as markets began to improve. "While markets were significantly more favorable during the second quarter, they remain choppy in the face of conflicting signals about global economic conditions," Laurence Fink, BlackRock's chairman and CEO, said in a statement. Fink said clients are showing a sense of "cautious optimism" and becoming more confident in investing in higher risk assets. Last fall, investors all but abandoned risky assets amid the peak of the credit crisis. Since early spring, markets have rallied as investors have become more confident that an economic recovery might be under way. As of June 30, BlackRock had $1.373 trillion in assets under management, a 4 percent decline from the $1.428 trillion under management at the same time last year. However, assets under management increased 7 percent when compared with the end of the first quarter as markets rallied during the spring.