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Tuesday, February 19, 2013

Fido's Earnings Fall 29 Percent

News summary by MFWire's editors

It was a rough year for the Boston behemoth.

Fidelity [profile] reported that its operating income declined 29 percent as fee pressure, low interest rates and redemptions from its active equity funds hurt revenue, according to Bloomberg.

The news wire, citing Fido's annual report to its shareholders, said that the company's earnings, excluding costs such as interest and taxes, decreased to $2.3 billion last year from $3.3 billion in 2011, the Boston-based company said today in its annual report to shareholders. Revenue declined 1.2 percent to $12.6 billion.

“Despite a challenging environment for revenue growth, Fidelity’s financial services businesses made significant investments in 2012 to enhance the products, services and investment insights we offer our customers,” chief executive Edward Johnson, chairman and chief executive officer, wrote in the report.

Investors pulled a net $5.3 billion from Fidelity’s asset- management unit, including $35.3 billion from equity funds. Bond funds gathered $17.3 billion, while bundled and asset-allocation products attracted $23 billion. Net withdrawals in 2011 totaled $36.3 billion.

Fidelity’s expenses grew 9 percent to $10.3 billion, “primarily from sizeable strategic investments and related headcount growth,” the company said in the report.

Bloomberg reports that Fido's assets under management rose 9.5 percent to $1.67 trillion, helped by a 13 percent gain by global stocks as measured by the MSCI AC World Index.

Employees control 51 percent of the voting shares in Fidelity, and the Johnson family owns the other 49 percent, according to Bloomberg. Ned and Abigail Johnson each hold at least 10 percent, according to regulatory filings.

Fido's earnings report caught the attention of other news outlets, including the Boston Globe. notes follow 

Edited by: Tommy Fernandez


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