STATE STREET, the world’s largest money manager for institutions, said quarterly earnings fell sharply and unrealised losses jumped in its commercial paper programme and investment portfolio, sending its shares tumbling 50 per cent.
“These results were very disappointing,” RBC capital analyst Gerard Cassidy said, adding that investors were clearly “spooked” by the higher unrealised losses and the company’s weak outlook.
Investors have long worried about State Street’s growing unrealised losses and whether the company would have to write them off.
State Street is the largest fund administrator in Ireland. State Street, its hedge fund administration company, International Fund Services, and recently acquired IBTemploy over 2,000 people in Dublin, Kilkenny, Naas, Co Kildare, and Drogheda, Co Louth.
State Street chief executive Ron Logue said the unrealised losses “continue to concern us” but they improved slightly in recent weeks.
The company said revenue is expected to be flat with 2008’s record results, falling short of the long-term goal of 8 per cent to 12 per cent growth. Operating earnings are also expected to be flat, below the long-term goal of 10 per cent to 15 per cent growth. Net income in the fourth quarter was $65 million (€50.4 million), or 15 cents per share, down from $223 million, or 57 cents per share, a year earlier. The numbers include expenses to cut its workforce and prop up ailing funds.
On an operating basis, earnings were $511 million, or $1.18 per share, down from $540 million, or $1.38 per share, a year earlier.
The company said after-tax, unrealised mark-to-market losses in its investment portfolio rose $3.0 billion during the quarter to $6.3 billion. – (Reuters)
