Lazy (a.k.a. small-f foolish) investors who are too busy smashing the buy and sell buttons to actually read a company's releases may have been scratching their heads Wednesday when boutique investment bank Lazard (NYSE:LAZ) popped 7.9% after its earnings release. The headlines that sprouted up after the announcement all trumpeted the fact that Lazard's second-quarter earnings came in lower than the prior year.

When it comes to the smaller boutique investment banks -- as opposed to the bulge bracket banks like Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), and Morgan Stanley (NYSE:MS) -- revenue from actual investment banking activities plays a much bigger role. Investment banking revenue, especially at an M&A-heavy shop like Lazard, is tied to the timing of deals closing. Not only can the exact timing be tough to predict, it can also come in fits and spurts, making revenue a bit lumpy.

So looking past the headline earnings decline, we see a more interesting picture. In the investment banking group, both financial restructuring and corporate finance posted strong gains year over year. Though incentive fees fell on the asset management side, management fees saw strong growth that helped the group gain 25% over its 2006 results. Total assets under management also jumped from $94 billion in the second quarter of 2006 to $135 billion at the end of this past quarter.

Despite working on some decent-sized deals in the quarter, Lazard's M&A revenue, which made up just more than two-thirds of the firm's total revenue, fell from the prior year. This decline obviously isn't something to jump up and cheer about, but the firm has a very strong backlog heading into the second half of the year. Lazard's backlog at the end of the second quarter included:

  • Barclays' $92 billion proposed purchase of ABN Amro
  • The proposed $45 billion buyout of former Income Investor pick TXU by KKR and TPG
  • The $11 billion merger of CBOT Holdings and CME Group (NYSE:CME) (now closed)
  • The proposed $9 billion buyout of Penn National Gaming (NASDAQ:PENN) by Fortress and Centerbridge
  • Microsoft's (NASDAQ:MSFT) $6 billion acquisition of former Rule Breakers pick Aquantive

As I mentioned in an article on Greenhill's earnings, a shaky market can easily cause ready and willing acquirers to walk away from the table. However, the fact that Lazard has such a deep pipeline and that its business is not overly concentrated in a single geography should provide some protection if the U.S. markets continue to act a bit punch-drunk.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...