Legg Mason Inc. on Tuesday reported its first quarterly loss since it went public in 1983. Company executives blamed the loss on noncash charges used to support its money market funds and reductions in several contracts.
The Baltimore-based wealth manager said it lost $255 million, or $1.81 per share, in the fourth quarter ending March 31, down from a net income of $172.5 million in the fourth quarter of 2007.
“We are reporting difficultresults in a difficult environment,” President and Chief Executive Officer Mark Fetting said. “I can assure you all of us at Legg Mason are disappointed with these results and determined to improve in the areas we influence.”
Fetting attributed the quarterly losses to $291 million in previously announced support for the firm?s money market accounts, along with a $94.8 million charge for a reduction in the value of management contracts with a subsidiary acquired by Legg Mason.
For the fiscal year ending March 31, Legg Mason reported record revenues of $4.63 billion, up 7 percent from the year before, but said net income for the year fell 59 percent to $267.6 million.
The firm reported assets under management of $950.1 billion, down 2 percent from the year before on market depreciation and net client cash outflows.
The firm also announced Tuesday that it plans to raise $1 billion in funds to add cash to its balance sheet. Fetting said the move would help Legg Mason remain flexible through the remainder of the credit crisis.
“I think it?s good for them and shows foresight to be conservative and get the capital when the money markets have loosened up a little,” said Andrew Richards, an analyst covering Legg Mason for Chicago-based investment firm Morningstar. “When you need it is not when you want to be going around cap in hand looking for it.”
Fetting compared the current credit crisis to mountain climbing, saying it had not bottomed out but rather reached a peak. He said early indicators in several key sections pointed to improvement in April business.
“These [climbing] experts emphasize the importance of completion of the entire journey,” Fetting said. “It appears that for the credit crisis we are at the summit, with the worst behind us. Yet we believe the next part will have challenges of its own.”
Legg Mason stock closed Tuesday down $6.46, or 10.29 percent, to $56.30.
