Legg Mason Swings to Third-Quarter Loss

BALTIMORE -- Legg Mason (LM) on Wednesday posted a worse-than-expected fiscal third-quarter loss, reversing a tiny profit from a year ago, as revenue tumbled and the asset manager recorded a massive charge related to the market meltdown.

For the three months ended Dec. 31, the company lost $1.49 billion, or $10.55 per share, compared with profit of $154.6 million, or $1.07 per share, in the year-ago period.

Revenue fell 39% to $720 million, from $1.19 billion in the year-ago quarter.

Analysts surveyed by Thomson Reuters, on average, expected the company to post a loss of $4.02 per share, on revenue of $826.4 million.

Legg Mason recorded a charge of $1.2 billion in its wealth management division, due to the impact of current market conditions.

The company lost $842.1 million on efforts to reduce structured investment vehicles, or SIVs, the sort of toxic paper created from risky debt that led to much of the recent market tumult as its value deteriorated.

Legg Mason also lost $243.2 million on additional support for liquidity funds and recorded a charge of $36.1 million from lost sublease income from "a major investment bank which had declared bankruptcy."

Assets under management fell 17% to $698.2 billion, from $841.9 billion a year ago.

Shares of Legg Mason closed at $19.44 on Monday.

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