Stilwell Financial reported its results for the third quarter, and they were not pretty. Before a special restructuring charge the soon-to-become Janus said it earned $23.7 million, or 9 cents a diluted share. The consensus on Wall Street had been 14 cents a share, according to Thomson First Call. Indeed, the adjusted number misses the lowest estimate of 10 cents collected by Thomson. Stilwell had earned $90.5 million, or 39 cents a share, in the year-ago quarter. The 5 cents per share miss is the largest miss by a mutual fund firm this year.

The shrinking asset base at the firm also caused revenues to decline by 29 percent to $257.8 million from $361.6 million.

When restructuring charges are added into the mix, Stilwell reported a loss of $131.2 million, or 60 cents a share. Those special charges reflect Stilwell's reorganization of its operating units into Janus that will be complete at the start of 2003. In that bucket are $28.7 million for severance and reorganization expenses. It also includes a deferred income-tax charge of $107.8 million taken in expectation of a sale its stake in DST Systems. Stilwell also charged off $18.4 million of impaired investments in Janus venture capital portfolio and other costs.

"Our new corporate structure is expected to eliminate at least $40 million per year in fixed costs and help ease some of the margin pressure that occurs during periods of market decline as we have been experiencing," said Landon H. Rowland, Stilwell chairman and chief executive officer, in the conference call.

Even after cuts from the reorganization are finished -- including the bulk of the sales and operating staff at Berger Funds -- Janus employees may not be safe. Stilwell executives told analysts on the call that the firm would look at more ways to cut costs if prices in the stock market continue to shrink.  

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