T. Rowe Price Associates Inc.'s revenues climbed to a record $113.2 million, and earnings jumped 26 percent to $20.5 million in the third quarter as investors poured money into mutual funds, the company said yesterday.
Analysts were expecting the nation's 14th biggest fund company to earn 64 cents a share -- tops, a survey by Zacks Investment Research said. But earnings grew to 67 cents a share, up 26 percent in the quarter ended Sept. 30, and $1.77 a share for the first nine months of the year, up 20.4 percent from a year ago.
"Based on our outlook for the remainder of the year, we expect record 1995 fourth-quarter and full-year results," said George J. Collins, president of T. Rowe Price. "The financial markets have been quite strong this year, and our domestic stock funds have enjoyed significant appreciation and cash inflows."
Despite the rosy projections, the Baltimore-based investment adviser's stock fell $1.875 and closed at $47.375, as the Dow Jones industrial average was off nearly 30 points and the Nasdaq 500 stock index fell 9.90 points.
The company and analysts blamed the decline on the market's poor performance.
"Financial stocks are just getting creamed," said Richard K. Strauss, an analyst with Goldman, Sachs & Co., who is recommending the stock.
"Even a good earnings report will be overwhelmed by a wave of market activity," said Steven E. Norwitz, a spokesman for the company. "We just happened to pick a bad market to report good earnings."
The stock market has proved to be a strong ally for the company. Price took in a net $1.2 billion from customers who put their money into the company's mutual funds, bringing the total to $2.7 billion for the nine-month period.
Assets under management increased nearly 23 percent to $71.5 billion.
The company's third quarter results included an extraordinary charge of $1 million, or 3 cents a share, because the company decided to prepay a $12.4 million note that matures in 2001.
Mr. Norwitz said if the company paid the note on its due date, it would cost Price 13 cents a share over time.
Price's only blemish was a 13 percent rise in operating expenses.
"We increased advertising and promotion primarily as a result of introducing our new variable annuity product," Mr. Collins said.