T. Rowe Price Associates Inc. reported yesterday that its first-quarter profit surged 40 percent to a record, and that revenue and earnings per share also reached new highs.
The Baltimore-based mutual fund company made $75 million in the quarter that ended March 31, compared with $53.4 million in the corresponding period a year earlier. The increase was driven in part by gains from venture capital investments.
Earnings per diluted share were 58 cents in the quarter, compared with 41 cents in the quarter a year earlier and substantially higher than the 45 cents to 53 cents a share analysts had expected.
Price's revenue rose 29 percent to $316 million, compared with $245.8 million in the first period in 1999.
"Overall, it was a good quarter," said John A. Hall, an analyst at New York-based Prudential Securities Inc. "It was far in excess of ... expectations."
Hall said revenue from venture capital investments -- $21.3 million compared with $5.7 million a year earlier -- added 6 cents to Price's earnings per share.
Shares of Price rose $1.2188 yesterday to $41.0313.
More conservative mutual fund companies such as Price, which follows a lower risk investment strategy, have not grown as fast as its more aggressive competitors such as Denver-based Janus. Nevertheless, Price's total assets under management rose 24 percent to $185.2 billion as of March 31, compared with $149.2 billion in the corresponding period a year earlier.
Assets managed in T. Rowe Price mutual funds were up 25 percent to $119.4 billion, compared with $95.5 billion a year earlier.
The growth encouraged Henry McVey, an analyst at New York-based Morgan Stanley Dean Witter. "The trend lines are turning more positive," he said. Price "is a sturdy company."
Hall said the growth in assets under management was largely driven by performance in the stock market as opposed to net new money flowing into the funds. The funds received net cash inflows of $173 million in the first quarter.
"It continues to have one of the best reputations ... but its asset growth has trailed many of its peers," he said.
George A. Roche, Price chairman and president, called the results "excellent ... despite extraordinary volatility in the stock market." Roche said the company has taken steps to broaden distribution of the funds. Last month, it made shares of 10 of its funds more widely available from brokers and financial advisers.
It also reached an agreement this month to buy the remaining 50 percent interest in Rowe Price-Fleming International from its venture partner for $780 million in cash. The move will enable Price to offer international investment services to non-U.S. residents.
Despite recent fluctuations in technology stocks, Roche said the economy is "robust and corporate earnings growth is strong."
"This is still a powerful economy driven by entrepreneurial energy, and we believe T. Rowe Price is on track to enjoy a year of progress in 2000," he said.