T. Rowe Price Associates' chairman told shareholders yesterday that the company anticipates double-digit increases in its first-quarter performance over a year ago and that the outlook for the rest of the year is also good.
Chairman George A. Roche said at the shareholders' annual meeting that the Baltimore mutual fund company expects revenue in the first quarter to increase by more than 20 percent over the first quarter a year ago and that earnings would jump more than 30 percent.
Despite volatility, the financial markets have remained at high levels, he said, and Price has realized high returns on its private equity and venture capital investments.
Price will release earnings next week. A year ago, it reported earnings of $53.4 million in the first quarter, or 41 cents per share, on revenue of $245.8 million.
Price's projected earnings for the first quarter of 53 cents per share or greater beats the analysts' consensus, which had pegged first-quarter earnings at 51 cents per share, said William Katz, an analyst with Merrill Lynch & Co. in New York. "It will be a solid year," he predicted.
On Tuesday, Price announced its largest acquisition ever, the purchase of its British partner's half-interest in their 21-year-old money management joint venture.
The $780 million cash deal is expected to close in three or four months and will give Price complete control of Rowe Price-Fleming International Inc. The joint venture, which may be renamed T. Rowe Price International, manages $43 billion in assets.
The acquisition came about as Chase Manhattan Corp. negotiated to acquire Price's partner, Robert Fleming Holdings Ltd., a privately held investment bank.
The acquisition is expected to dilute earnings in the first year by less than 5 percent.
Bruce Brewington, an analyst with Putnam, Lovell in San Francisco, said the acquisition puts Price in a strong position. The company, which had a noncompete clause with its foreign partner, can now market its retirement planning products in Asia and Europe, he said.
Despite the optimistic outlook, Price's stock fell $1.8125 per share yesterday, closing at $37.50.