Janus Capital Group
posted flat third-quarter earnings Thursday but managed to top analysts' estimates.
For the quarter ended Sept. 30, the Denver fund shop made $51.3 million, or 22 cents a share. That's up from the year-ago $50.9 million, or 22 cents a share. Revenue slipped to $238 million from $257 million a year earlier.
Excluding nonrecurring charges, Janus earned $34.3 million, or 15 cents a share, in the quarter ended Sept. 30. That's down from $62.4 million, or 27 cents a share, in the year-ago period. Still, the company's results were a penny ahead of the Wall Street analyst consensus estimate.
The news comes as the fund giant tries to shake off the effects of last year's mutual fund scandal. Janus' investment management business reported third-quarter 2004 operating income of $53.5 million and operating margins of 24.9%, compared with operating income of $80.3 million and operating margins of 31.3% in the third quarter 2003. Third-quarter 2004 adjusted operating income and margins totaled $66.3 million and 30.8%, respectively, compared with $91.9 million and 35.8%, respectively, in the third quarter of 2003.
The decline in operating results was primarily due to lower average assets under management and the previously disclosed reduction of management fees that became effective July 1, 2004. The fee reduction was a result of an agreement with regulators due to Janus' role in the mutual fund market-timing scandal.
Comparing the first nine months of 2004 with the same period last year, the investment management segment reported improved adjusted operating income and margins despite lower revenue. Janus says it achieved those improvements while increasing compliance-related expenditures and eliminating the use of soft dollars for third-party research and services, a pair of reforms also brought to bear by last year's industrywide scandal.
"We're setting the tone at the top," said CEO Steve Scheid, "by instituting a series of corporate governance measures and strengthening our internal controls. At the same time, we're moving from a time of transition to one of proactive execution. As we build our business, we're shifting from defense to offense -- while always making fundholders' interests our top priority."
Early Thursday, Janus was flat at $14.74.