Legg Mason Meets Lowered View

As expected, revenue is hit by a shift toward fixed-income assets.
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Legg Mason

(LM) - Get Report

posted second-quarter results in line with its lowered forecasts, as the acquisition of a business from

Citigroup

(C) - Get Report

helped to boost earnings despite revenue weakness.

The Baltimore-based asset manager said Tuesday that its earnings rose to $143.7 million, or $1 a share, from $121 million, or 99 cents a share, a year earlier.

Earlier this month, Legg Mason projected earnings of 96 cents to $1.02 a share for the September quarter, well below analysts' estimates at the time of $1.16 a share. The company, citing a weaker-than-expected showing in September, said its asset mix shifted toward lower revenue-generating fixed income assets.

Legg posted revenue Tuesday of $1.03 billion, up sharply from $466.4 million a year earlier due to the acquisition of Citigroup's asset management business. But the top line was down 0.7% from the prior quarter as a lower level of average equity assets brought down revenue.

Analysts polled by Thomson First Call forecast earnings of $1.02 a share and revenue of $1.03 billion.

Legg Mason's assets under management at Sept. 30 totaled $891.4 billion, up from $418.5 billion a year earlier and $854.7 billion at June 30. Equities represented 35.4% of assets, down from 36.5% at the end of the June quarter. Fixed income, meanwhile, grew to 49.5% of assets from 49.2% at June 30.

"While we were certainly disappointed by the results for the September quarter, we are encouraged by the fact that we entered the December quarter with higher levels of assets under management and a better equity market environment," the company said.

Shares of Legg Mason recently were down 50 cents, or 0.6%, to $86.14. The stock has fallen about 13% since the beginning of the month.

Analysts say Legg Mason's disappointing quarter

isn't reflective of other asset managers' results. Fellow fund firms

Janus Capital

(JNS)

,

T. Rowe Price

(TROW) - Get Report

and

Franklin Resources

(BEN) - Get Report

all will report their results later this week.