The chairman and chief executive officer of Janus Capital Group gave earnings guidance for the first time Wednesday during its quarterly conference call, predicting that earnings per share will be 55 to 60 cents in 2005.
Steve Scheid, the Denver fund company's CEO, said that he expects stronger returns this year despite the announcement Wed-nesday that Janus' fourth-quarter net income fell 98%, to $18.2 million or 8 cents a share. That was down from $811.7 million, or $3.51 a share in the fourth quarter of 2003. Analysts had expected 14 cents a share.
For the full year net income was $169.5 million, or 73 cents a share, down from $942.7 million, or $4.11 a share. Janus reported profit of 20 cents a share in the third quarter.
The fourth-quarter results looked poor in comparison with a big gain in the fourth quarter of 2003 from Janus' sale of DST Systems. Excluding certain items, the company said its adjusted fourth-quarter net income was $28.8 million, or 13 cents a share, compared with $53.3 million, or 23 cents, the year earlier. This 85% decline in adjusted profit was a result of investors' pulling their assets from the company's funds.
Janus was among the first fund companies named in the investigations of some investors' being allowed to "market time" their fund trading. Janus settled the allegations by state and federal regulators last April and took a fourth-quarter charge of $74 million.
Its quarterly revenue fell 12.9%, to $221.5 million, largely because of a 9.6% decline in assets under management, to $134.9 billion, and a $5.8 billion cumulative cut in management fees the company agreed to as part of the regulatory settlement.
Mr. Scheid said Janus - in order to address the trading issues - has created a compensation plan for portfolio managers and top executives that links their earnings to the performance of Janus funds.
Janus plans to aggressively launch products this year, he said, and will look for acquisitions in an effort to rebound. The company has allotted $23 million for marketing and will also look to improve distribution as part of its strategy to improve performance and fund flows.
Mr. Scheid said Janus' new channel heads, sales teams, and brand investment are "telling clients that we are here to stay. Janus is going back to its core."
