T. Rowe Price Earnings Disappoint

Mutual fund company T. Rowe Price(TROW Quote - Cramer on TROW - Stock Picks) reported first-quarter 2007 earnings that fell short of Wall Street expectations, sending the stock down nearly 2% in morning trading.

Net income reached nearly $143 million in the first quarter of fiscal 2007, up from $116.7 million for the same quarter in 2006. The company also reported diluted earnings of 51 cents per share, a 21% increase from 42 cents per share the same quarter a year ago.

However, analysts surveyed by Thomson Financial had been expecting $512.5 million in first-quarter 2007 revenue and $147.3 million of net income, resulting in earnings of 53 cents per share.

Net revenue totaled $508.4 million, including $425 million in advisory fees. In the first quarter of fiscal 2006, the company reported $429.3 million in net revenue. Additionally, T. Rowe Price's first-quarter 2006 data have been adjusted to reflect a 2-for-1 common-share stock split from June of that year.

Assets under management grew to a record $349.9 billion by March 31, 2007, up 4.5% or $15.2 billion since the end of fiscal 2006. Net cash inflows from investors added up to $9.6 billion during Q1 2007. Nearly $5.7 billion in inflows went to U.S. stock and blended asset funds.

The (PRGFX Quote - Cramer on PRGFX - Stock Picks)Growth Stock Fund added $2.3 billion of net investments during the quarter. T. Rowe Price says $2.8 billion of inflows originated in their series of target-date retirement funds, the largest quarterly amount since the line was launched in September 2002.

Another mutual fund firm, Waddell and Reed(WDR Quote - Cramer on WDR - Stock Picks) reported a record $50 billion in assets under management, but also fell slightly short of Wall Street earnings expectations.

The company's net income was up 17% in the first quarter of fiscal 2007, totaling $28.7 million or 35 cents per diluted share compared with $24.6 million or 30 cents per share in first quarter 2006. Revenues jumped 9.5% to $189.5 million during that same time period.

Analysts had been expecting, on average, $194.8 million in revenue and 36 cents per share in earnings, according to Thomson.

The stock finished down close to 3% for the day.