Calamos Asset Management shares tumble after earnings fall

Shares of Calamos Asset Management Inc. tumbled Wednesday, a day after the company said its first-quarter earnings fell 94 percent.

Calamos shares fell 16 cents, or 1 percent, to $15.58. Shares have traded between $14.46 and $34.61 during the past year.

Net income for the first quarter was $449,000, or 2 cents per share, down from $7.5 million, or 32 cents per share, during the same period last year.

The decline was primarily attributable to an unrealized loss on market value of the company's consolidated partnerships and offshore funds. The unrealized loss accounted for a reduction in earnings of 25 cents per share.

Because of the reduced first-quarter earnings, Goldman Sachs Group Inc. analyst Marc Irizarry cut his 2008 earnings estimate for the company to 85 cents per share from $1.07 per share.

"The firm's substantial interest in its partnerships and offshore funds leads to a higher concentration risk in the business model, which could result in further earnings volatility," Irizarry wrote in a research note.

Revenue also fell during the quarter to $110.7 million from $115.7 million during the year-ago period.

To combat declining revenue, the company is undertaking a cost-reduction program, Buckingham Research Group analyst William Katz, said in a research note. Plans to cut jobs and reduce base salaries for some executives, including the chief executive, should help stabilize margins, Katz wrote in the note. The cost reduction plan is likely to stabilize the company's operating margin, which narrowed to 40.1 percent during the first quarter.

Calamos' operating margin was 43.3 percent during the same quarter last year.

Despite the first-quarter earnings decline, Katz raised his 2008 earnings estimate to 95 cents per share from 90 cents per share because of the expected cost savings and market appreciation.