Janus Profit Falls 33%, but Net Inflow Is Up

Janus Capital Group Inc. said Wednesday that its third-quarter earnings declined 33%, but that it was the first time since the mutual funds manager was targeted by an improper trading investigation that more money was being added to the funds than was being withdrawn.

Janus shares rose $1.61, or 11%, to $16.78.

Chief Executive Steve Scheid also announced the promotion of Chief Investment Officer Gary Black to replace him, effective in January, saying it would be a natural transition. Scheid will remain as chairman.

“For the first time in a number of years, I think we see more opportunities than challenges here,” Scheid told analysts during a conference call.

For the quarter that ended Sept. 30, Janus’ net income was $31.7 million, or 15 cents a share, compared with $47.3 million, or 20 cents, in the third quarter of 2004. Revenue totaled $218.4 million, up from $215.2 million in the year-earlier period.

Average assets under management were $135 billion, up 4.5% from $129.2 billion in the third quarter of 2004.

Under Scheid, Janus has worked to rebuild investor trust after it was accused of improper trading practices as part of a scandal that swept the $7-trillion mutual fund industry in September 2003. In August 2004, Janus finalized a $226.2-million settlement with state and federal regulators without admitting or denying the allegations.