QUOTE AND NEWS
Clusterstock  Jul 27  Comment 
(Reuters) - BlackRock Inc is on the prowl for energy and infrastructure projects in the United States, Mexico and Asia that its institutional clients can invest in, Mark McCombe, head of BlackRock's institutional business, said in an interview...
Yahoo  Jul 27  Comment 
The asset manager, the world's largest, is trying to build a name for itself in private financing deals to attract and please yield-hungry clients such as U.S. pension funds, McCombe said. Historically, BlackRock has invested in such deals through...
TheStreet.com  Jul 27  Comment 
NEW YORK (TheStreet) -- There's no doubt that Donald Trump believes in BlackRock hedge funds. The real-estate magnate and presidential candidate made his biggest securities bet in one of them, despite the warnings of Carl Icahn, the activist...
Clusterstock  Jul 26  Comment 
The Dow Jones Transportation Average index has underperformed the broader Dow Jones Industrials Average and entered correction territory this month, leading some market watchers to speculate that a deeper U.S. selloff could be coming soon. Under...
The Economic Times  Jul 24  Comment 
Anup Maheshwari - Head - Equities & Corporate Strategy, DSP BlackRock, shares his views on the earnings season so far and the macro scenario.
Market Intelligence Center  Jul 21  Comment 
Carl Icahn, the billionaire activist investor, has a history of lambasting CEOs and pressuring them to take actions that would raise their companies’ share prices. Last week, his target was not a CEO but the world’s largest asset...
Yahoo  Jul 21  Comment 
BANGKOK/HONG KONG (Reuters) - U.S. fund giant BlackRock Inc (BLK.N) has won a special new licence that will allow it to raise funds in China directly for the first time, a senior executive told Reuters, paving the way for the world's largest money...
Forbes  Jul 17  Comment 
BlackRock reported a strong performance for the second quarter of the week on Wednesday, July 15, as marked inflows in the asset management giant’s actively managed fixed income funds helped quarterly revenues cross the $2.9 billion mark for the...




 
TOP CONTRIBUTORS

BlackRock (NYSE:BLK), Inc. is the world's largest publicly traded investment management and financial service firm.[1] BlackRock's main source of revenue comes from its investment advisory fees generated by managing financial asset types including fixed income, equity, real estate, and alternative investments as well as fees generated from "BlackRock Solutions".[2] Blackrock does not engage in proprietary trading since it may represent a potential conflict of interest with its clients.[3] In 2010, BlackRock earned a total of $2.1 billion in net income from its total revenues of $8.6 billion.[4]

BlackRock's financial performance depends heavily upon the stock and bond markets. It also depends on the risk appetite of its clients, as higher risk investments generally earn much more advisory and performance fees for BlackRock than less risky ones. Also, how successfully BlackRock is able to integrate its operations with Barclays Global Investors, which it acquired in the past may play a big role in its future success.

Company Overview

Headquartered in New York, BlackRock manages assets for both large institutional clients and private individual investors internationally, although the majority of its business is conducted in North America and Europe. BlackRock offers a breadth of financial investment products, including fixed income, equities, cash management, and alternative investments. BlackRock's revenue comes primarily from advisory and administration fees for managing and advising assets for its clients.

Business and Financial Metrics

In 2010, BlackRock earned a total of $2.1 billion in net income from its total revenues of $8.6 billion.[4] This was a significant increase from 2009, when BlackRock had total revenues of $4.70 billion, operating income of $1.28 billion, and net income of $875 million.[5]

Business Segments

BlackRock operates the company as a single business. However, its revenues can be broken down into its revenue sources: Investment advisory and administration fees, BlackRock Solutions, Distribution Fees, and Other Revenue.

Investment advisory and administration fees (90.9% of 2010 Revenues)[6]

BlackRock's Investment advisory and administration earns fees under four sub categories: i) Fixed Income, ii) Equities, iii) Cash Management, and iv) Alternative Investments.

BlackRock Solutions (5.3% of 2010 Revenues)[6]

Under the BlackRock Solutions name, the company has developed an operating platform called Alladin to support its investment and risk management operations. BlackRock offers Alladin, along with other services, to institutional investors.[7]

Distribution Fees (1.3% of 2010 Revenues)[6]

Other Revenue (2.4% of 2010 Revenues)[6]

Other revenue include property management fees, net interest earned on loans, sales commission, and fund accounting services.

Trends and Forces

BlackRock must successfully integrate its operations with Barclays Global Investors

After BlackRock acquired Barclays Global Investors, it began merging and integrating its operations. Early signs have shown significant gains from the acquisition and a relatively smooth transition, as BlackRock's earnings increased five fold compared to the previous year.[8] However, things have not gone as smoothly as many expected, as BlackRock's CEO Laurence Fink admitted that BlackRock "experienced some significant merger-related outflows in the quarter." [9] Whether BlackRock can successfully continue to integrate Barcalys Global Investors operations into its own without losing investors will make an impact of its future earnings.

BlackRock's source of revenues have slowly shifted away from fixed income assets toward equities

Roughly half of BlackRock's investment advisory fees were due to equities, and only 20.3% came from fixed income.[10] This signals a change in their sources of revenue, as historically only 33.6% of investment advisory fees came from equities.[11] Also, in the past assets allocated to equities as a percentage of total AUM has consistently been less than fixed income, suggesting a higher margin for equities since their earnings are higher despite less total AUM. Therefore, the gradual shift away from fixed income and into equities may help BlackRock earn high investment advisory fees. However, because BlackRock earns revenues based on the total AUM, large fluctuations in the stock market may impact their earnings. For instance, during stock market downturns, the total value of equities will decline, thereby reducing BlackRock's earnings.

Competition

BlackRock faces competition from other companies that offer investment management services to both retail and institutional clients, including Barclays Global Investors, State Street (STT), and Fidelity Investments (privately held). BlackRock was ranked fourth worldwide in terms of global AUM in 2008, behind Barclays Global Investors, State Street, and Fidelity Investments.[12]

  • State Street (STT) is a large investment advisory firm based in Boston, Massachusetts.[13][14]
  • Fidelity Investments is the largest mutual fund company in the United States.[15]



References

  1. BLK 10-K 2009 Item 1 Pg. 1
  2. BLK 10-K 2008 Item 6 Pg. 30
  3. BLK 10-K 2009 Consolidated Statements of Income Pg. F-5
  4. 4.0 4.1 BLK 10-K 2010 Item 6 Pg. 40
  5. BLK 10-K 2009 Item 6 Pg. 38
  6. 6.0 6.1 6.2 6.3 BLK 10-K Item 7 Pg. 60
  7. BLK 10-K 2008 Item 1 Pg. 2
  8. Caterpillar Lifts Dow to a Gain. Donna Yesalavich. The Wall Street Journal.
  9. BLK 10-K 2008 Item 7 Pg. 44
  10. BLK 10-K 2006 Item 7 Pg. 32
  11. Pensions & Investments Online. Top 150 managers of international/global assets.
  12. STT 10-K 2009 Item 1 Pg. 1
  13. STT 10-K 2009 Item 6 Pg. 31
  14. Fidelity Investments’ 2009 profit rises 5 percent as fund performance improves. The Associated Press.
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