State Street Sinks on Portfolio Losses

The Boston-based investment manager beat consensus estimates, but shares slid after the company disclosed losses in a conference call.
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Updated from 10:32 a.m. EDT

State Street

(STT) - Get Report

shares slumped more than 10% on Tuesday, after the Boston-based investment manager beat first-quarter estimates but disclosed big losses in its investment portfolio.

The company reported a first-quarter profit of $530 million, or $1.35 a share, vs. $314 million, or 93 cents a share, in the year-ago period. Excluding profits associated with its merger with Investors Financial Services, State Street earned $1.39 a share, vs. 93 cents a share in the first quarter last year.

The company posted revenue of $2.58 billion, compared to $1.7 billion in the year-ago period. The revenue results include $220 million from the Investors Financial acquisition.

Analysts polled by Thomson Financial had expected a profit of $1.30 a share on revenue of $2.42 billion.

Shares initially reacted favorably to the earnings report, climbing 4% to $79.86 after the open. But shares dipped as low as $68.61 after CFO Ed Resch told analysts on an earnings conference call that the company suffered a loss of $3.2 billion on its portfolio and a $2.5 billion loss on conduits, according to

Reuters

.

Shares closed down $7.63, or 9.9%, to $69.23.

Fitch Ratings responded by putting the stock on ratings watch negative.

State Street said given the "unsettled" economic environment going forward, it expected to hit the middle ranges of its forecasts for the full year. The firm sees operating earnings per share of between 10% and 15%, an increase in revenue of between 14% and 17% and a return on equity of between 14% and 17%.

Analysts polled by Thomson Financial see a full-year profit of $5.14 a share, a jump of 12.7% and revenue of $9.71 billion, an increase of 15.7%.

Know What You Own

: STT operates in the investment management industry, and some of the other stocks in its field include

The Bank of New York Mellon

(BK) - Get Report

,

Citigroup

(C) - Get Report

and

Northern Trust

(NTRS) - Get Report

. These stocks were recently trading at $42.37, +0.69%, $22.69, +0.80% and $66.94, +2.98%, respectively. For more on the value of knowing what you own, visit TheStreet.com's

Investing A-to-Z

section.

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