Neuberger Berman became the third fund firm this week to fall short of Wall Street expectations. The fund firm reported earnings of $0.47 per share. That figure is one cent short of analyst expectations for the first quarter. The firm also announced that it has dropped Arthur Anderson in favor of KPMG as its outside auditor.

The fund firm was able to grow earnings per share from a year ago despite a lower total bottom line due to stock buybacks lowering the number of shares outstanding in the firm. The firm earned $33.2 million, down from $34.2 million in the first quarter, 2001. Earnings per share a year ago was $0.46 per share.

Earnings fell even as assets under management at Neuberger hit an all-time high of $61.9 billion. The fall in profits reflected a change in the asset mix in its private wealth management unit to more fixed income investments. It also reflects lower trading volumes in its professional securities unit.

Altogether assets under management grew 13 percent, while revenues rose just 3.5 percent to $160 million and profits fell.

Jeffrey B. Lane, president and chief executive officer, pointed to the firm's net cash inflows in the Mutual Fund and Institutional segments of its business as a sign that the firm's fundamentals are sound. Cash flows into those lines was $1.4 billion, the highest quarterly level since the firm went public in 1999.

Mutual Fund and Institutional

Assets under management in these businesses rose 12.9 percent to $36.1 billion from $32.0 billion at March 31, 2001 and $34.0 billion at year-end 2001. The rise in assets drove revenues up 2.8 percent to $56.7 million from $55.2 million. Pretax income rose 9.6 percent to $21.6 million from $19.8 million.

Cash flows into mutual Fund and sub-advised accounts were $896 million in the quarter, more than double the $425 million of net cash inflows in the 2001 period. The Institutional Separate Accounts also saw inflows of $65 million after seeing outflows in all of 2001.  

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