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ORANGE COUNTY EARNINGS

Pimco's Revenue Advances With Rise in Managed Assets

October 28, 1998|Bloomberg News

Pimco Advisors Holdings LP said third-quarter earnings rose 10%, as managed assets grew by about $34 billion and revenue advanced 15.6% from the year-earlier period.

The Newport Beach-based company, which manages $226 billion for institutions and individuals--$3 billion less than at the end of June--said net income rose to $19.8 million, or 39 cents a unit, from $17.9 million, or 37 cents, a year earlier, excluding a nonrecurring gain of $1.9 million, or 4 cents a unit.

Earnings growth at Pimco fell short of the growth in assets because bond assets, which carry lower management fees, advanced while equity assets, which have higher fees, declined.

Pimco's net income fell a penny short of analysts' expectations, according to a survey of five analysts by First Call Corp. Last year's results were reported on a pro forma basis to reflect the November acquisition of New York-based Oppenheimer Capital.

Revenue totaled $214 million, up from $185 million a year earlier. Assets under management climbed to $226 billion, a gain of 17.9% over the $191.5 billion managed a year ago.

Pimco's institutional and mutual-fund bond assets, managed by its largest affiliate, Pacific Investment Management Co., rose by 37.7% to $142 billion from $103 billion. That more than offset the drop in equity and money market assets. Equity assets declined 5% to $81 billion from more than $85.3 billion, while money market assets fell 7.1%, to $3.08 billion.

The current market environment, which has favored bonds, "has really been working to our advantage," Pimco Chief Executive Officer William Cvengros said, though Pimco is "well-positioned" when the stock market recovers with its equity affiliates, including Oppenheimer Capital.

Pimco's equity assets under management fell $12.1 billion from June through September due to the stock market slump. Bond assets, however, increased as investment gains added $4.9 billion to Pimco's asset total, while investors poured another $4.3 billion into bond portfolios. Pimco had 64% of its asset total in bonds at the end of September and 36% in stocks.

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