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Eaton Vance profit down as investors withdraw cash

November 22, 2011

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BOSTON—Investment manager Eaton Vance Corp. on Tuesday said its fiscal fourth-quarter earnings fell 7 percent as investors withdrew more cash than they deposited amid volatile markets.

Eaton Vance reported net income of $46.8 million, or 40 cents per share, for the three months ended Oct. 31. That was down from $50.3 million, or 41 cents per share, in the same quarter a year ago.

Excluding certain items, Eaton Vance reported adjusted earnings of 47 cents per share in the latest quarter. Analysts surveyed by FactSet expected 45 cents per share, on average.

Revenue slipped 3 percent to $294.6 million from $303.6 million. Analysts had been expecting $305.2 million.

Investment advisory and administration fees -- money the Boston-based company collects for managing mutual funds and separate accounts -- increased 4 percent to $239.7 million as average assets under management grew. But that gain was offset by declines in two smaller revenue categories, distribution and underwriter fees, and service fees.

Eaton Vance said its long-term funds and separate accounts recorded net withdrawals of $2.7 billion in the latest quarter, compared with net deposits of $3.2 billion in the year-ago quarter, and net deposits of $1.9 billion in this year's third quarter.

The latest quarter's outflows came as the stock market took a volatile turn. The Standard & Poor's 500 dropped more than 12 percent from August through September, then rallied to gain about 11 percent in October.

Eaton Vance Chairman and CEO Thomas E. Faust Jr. called it a "difficult" fourth quarter, citing the recent outflows, and a 31 percent decline in adjusted earnings compared with this year's third quarter.

Assets under management totaled $188.2 billion as of Oct. 31, up 2 percent from a year ago. But the total was down 5 percent from the end of July, in part because of lower stock prices.

For its full fiscal year, Eaton Vance earned $214.9 million, or $1.75 per share, up from $174.3 million, or $1.40 per share, in the previous fiscal year. Revenue rose 12 percent to $1.26 billion from $1.12 billion.

Shares of Eaton Vance dropped 31 cents, or 1.3 percent, to $22.83 in morning trading.