T. Rowe Price is cutting 288 jobs, representing 5.5 percent of its workforce. The cuts come as the Baltimore-based fund firm on Wednesday morning reported a 68.1 percent drop in its first quarter net income, to $48.2 million.

"Although most areas of the firm are affected, the majority of staff reductions are in the phone, processing, and technology areas where lower volumes and a reduced number of projects has resulted in capacity that exceeds current business needs," company executives said in the press release.

No portfolio managers were affected. Six of the company's 340 investment professionals were included in the layoffs.

Prior to the headcount reduction, T. Rowe counted 5,230 employees.

The company's earnings results included non-cash charges of $35.6 million for the "other than temporary" impairment of some of the firm's investments in sponsored mutual funds.

At the end of March, T. Rowe had mutual fund AUM of $158.8 billon, down 3 percent or $5.6 billion, from the yearend 2008 level.

Investment advisory revenues were down nearly 35 percent, or $163.3 million, compared to the first quarter of 2008.

T. Rowe saw net inflows of $1.8 billion during the first three months of 2009. Its stock funds recorded net inflows of $1.2 billion, while its bond and money funds had $600 million of net inflows.

Company executives said the decline in market valuations, net of income, brought AUM down by $7.4 billion during the quarter.

"Yesterday was a difficult day for all of us at T. Rowe Price as we regrettably had to augment our ongoing expense-management efforts with a workforce reduction," said T. Rowe Price president and CEO James Kennedy in the news release. "This was an action we had been diligently trying to avoid...Unfortunately, the historic decline in financial markets has lowered our assets under management, and thus our revenues, to levels last seen in 2005."  

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