Blackstone Swings to Loss

The private equity firm was hit by its investment in bond insurer FGIC.
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Private equity firm the

Blackstone Group

(BX) - Get Report

swung to a net loss in the fourth-quarter, weighed by the sagging housing and credit markets and its investment in bond insurer

Financial Guaranty Insurance Co.

Blackstone lost $170 million in the fourth quarter, vs. a profit of $1.2 billion in the year-ago period, based on generally accepted accounting principles. Total revenue slipped to $345 million in the fourth quarter compared to $1.3 billion in the year-ago period.

For the full year, Blackstone posted a profit of $1.62 billion, vs. $2.27 billion, based on GAAP. Total revenue came in at $3.05 billion, compared to $2.62 billion.

"Difficult market conditions in the U.S. and Europe continue in 2008 and there is little visibility on when these conditions might improve," Chairman and CEO Stephen Schwarzman said in a company statement. "However, despite the meltdown in the credit markets, we have made eight new private equity commitments since the credit crunch representing $2.7 billion of equity and we expect to continue to see new investment opportunities, particularly in Asia. We will remain disciplined in our approach and will opportunistically purchase well priced assets throughout the globe."

Net income after taxes per adjusted unit fell to 8 cents per share in the fourth quarter, vs. 72 cents a share a year ago. For the full year, Blackstone earned $1.62 a share, vs. $1.27 a share in 2006.

Analysts polled by Thomson Financial expected a profit of 19 cents a share. For the full year, analysts expected $1.47 a share.

Blackstone said it had reduced the value of its investment in FGIC, which accounted for $122.2 million, or 69%, of the decline in revenues for the year. The closely held bond insurer also is owned in part by fellow private equity firm

Cypress Group

and financial guarantor

PMI Group

(PMI)

.

Blackstone shares were falling 3.4% to $14.08 in Monday morning trading.

This article was written by a staff member of TheStreet.com.