January 9, 2009 / 2:05 PM / 10 years ago

UPDATE 2-MSCI shares hit by weak rev view, Q4 profit drop

* Does not see near-term revenue target reachable

* Will push back hiring plans to manage costs

* Subscription growth and retention rates fall

* Weakness in subscriptions to hurt 2009 (Adds details from conference call)

Jan 9 (Reuters) - MSCI Inc MXB.N said it does not expect to meet its near-term revenue growth targets as it posted its fourth straight quarterly profit drop on soaring expenses, sending its shares down as much as 16 percent.

“In the near term, we do not believe that we will reach the revenue growth targets,” Henry Fernandez, chief executive of the investment analysis and market index company, said in a conference call with analysts.

Revenue growth slowed in the fourth quarter, hurt by challenging financial markets across several product categories, he said.

Equity index asset based fees fell 28 percent to $13.5 million in the quarter.

However, Fernandez said the company was comfortable with its long-term financial targets of revenue growth in the midteens.

The company, which was spun off from Morgan Stanley (MS.N) last year, said it saw a decline in new subscription growth and retention rates.

“We experienced slower growth in new subscriptions and lower retention rates in the fourth quarter reflecting the adverse impact on our clients from the turmoil in the financial markets,” Fernandez said.

The impact of this weakness will be reflected in financial results during 2009, he added.

Fernandez said the company was managing expenses cautiously and would push back the timing of some of its hiring plans until the near-term outlook grows clearer, he added.


The company earned $12.8 million, or 13 cents a share, in the fourth quarter ended Nov. 30, down from $18.2 million, or 21 cents a share, a year earlier.

Revenue rose 6 percent to $107.4 million.

Analysts were expecting the company to earn 24 cents a share, on revenue of $107.7 million, according to Reuters Estimates.

Operating expenses rose 27 percent to $77.2 million.

Shares of the New York-based company fell as low as $15.45 before recovering to trade down 13 percent at $16.02 Friday afternoon on the New York Stock Exchange. (Reporting by Amiteshwar Singh in Bangalore; Editing by Amitha Rajan and Mike Miller)

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