BlackRock Gets a Black Eye

Posted Apr 26th 2010 2:30PM by Tom Taulli
Filed under: Earnings Reports

As one of the few major financial institutions that thrived during the financial crisis, BlackRock (BLK) was smart enough to continue to find ways to get bigger and bigger. Of course, the marquee deal was the $13.5 billion acquisition of Barclays Global Investors (BGI), which focuses on the growing exchange-traded funds (ETF) industry.

However, BlackRock has experienced some choppiness. For example, the firm's stock price is down 7% in today's trading.

In the first quarter, the company posted earnings of $423 million, or $2.17 per share, which is up from $84 million, or $0.62 per share in the same period a year ago. If you take away the impact of the acquisition and other one-time charges, the earnings came to $2.40 per share. Revenues doubled to $2 billion.

All good, huh? The problem is that BlackRock fell short of expectations. The consensus was for earnings of $2.45 and revenues of $2.2 billion.

It's true there was some weakness in areas like quant funds and cash management vehicles. But these are still fairly small changes, in light of the enormous size of BlackRock (the firm manages $3.36 trillion).

For the most part, BlackRock is still in the early stages of its BGI deal. And given the successful integration so far, the deal should provide key platform for continued growth.

Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.

Tags: blk, inthenews