Moving the goal posts

10 March 2008 By Lauren Silva

The private equity firm s fourth quarter earnings underline the miserable time private equity firms are having. Its stock is down more than 50% since it went public last June. But the outlook has deteriorated dramatically. Shareholders need to reset their expectations.

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Blackstone's fourth quarter economic net income, the private equity firm's preferred earnings metric, declined to $88m, or 8 cents a share, compared to $234m, or 21 cents a share in the previous quarter. Analysts were expecting around 20 cents a share, according to Bloomberg.

The firm's private equity division wrote down several portfolio companies, resulting in negative revenue of $15m, compared to revenue of $227m in the previous quarter. Revenue in Blackstone's real estate division increased to $113m versus $109m in the previous quarter. Revenue in the marketable alternative asset management division rose 43% to $178.2m. Revenue in the advisory business rose 7% to $90.6m.

Assets under management rose to $102bn at end 2007, a 47% increase from a year earlier but only a 4% increase during the fourth quarter.

Stephen Schwarzman, chief executive, referred to a "meltdown" in credit markets and said: "Difficult market conditions in the US and Europe continue in 2008 and there is little visibility on when these conditions might improve".

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Assets under management rose to $102bn at end 2007, a 47% increase from a year earlier but only a 4% increase during the fourth quarter.

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