Falling A Share Sales Hit Waddell & Reed
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Tuesday, October 25, 2011

Falling A Share Sales Hit Waddell & Reed

The parent of Ivy Funds [see profile] reveals third quarter results that fell short of analyst expectations. One reason is a shift in the mix of which products are selling, explained Waddell & Reed [see profile] executives. Still, the Overland Park, Kansas-based firm maintained positive net flows while falling short of earnings expectations [see earnings call transcript].

It revealed third quarter earnings per diluted share of $0.46, down from $0.58 in Q2 2011 and $0.47 in Q3 2010.

Reuters reports that analysts expected the broker-dealer to earn $0.50 per share. MarketWatch and RTTNews also covered Waddell's earnings.

Even with the down markets, Waddell boasted Q3 2011 net inflows of $1.3 billion compared to $1.7 billion in Q2 2011 and $658 million in Q3 2010.

The company cited both lower A-shares sales and lower 12b-1 fees as "almost equally responsible for the sequential decline in revenues" in the advisors channel. The advisor channel saw $133 million in net outflows. Those outflows were overwhelmed by strong inflows in other sales channels. The wholesale channel saw $550 million in inflows and the institutional channel added $906 million in net inflows.

"Despite market risk-aversion, Waddell & Reed continued to generate meaningful organic growth," stated Hank Herrmann, chairman and CEO. "Heightened volatility in the equity markets was an important contributor to weaker flows, offset somewhat by stronger demand for our fixed income products."

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