T. Rowe Price, the seventh largest U.S. mutual fund company, offered a disappointing first-quarter profit forecast on Thursday, despite projecting an 80% improvement from a year ago. As a result, the company saw its shares drop $1.05, or 1.92%, to $53.52 on Nasdaq.

Speaking at the firm’s annual meeting, Chairman and President George Roche projected an 80% spike in first-quarter earnings and said the company is well-positioned to weather market jitters brought on by fierce fighting in Iraq and the threat of another terrorist attack. He also told shareholders that revenue for the quarter increased roughly 40 percent

The Baltimore-based asset manager said it expects to post a net profit of 56 cents a share on revenue of $307 million, a penny shy of analysts’ expectations. That compares to a profit of 31 cents a share on net revenue of $219 million in the year-ago period. Wall Street analysts, on average, were projecting the company to earn 57 cents a share on revenue of $299 million, according to research firm Thomson First Call.

Roche also addressed the mutual fund trading scandal that has roiled the industry the past seven months. He condemned those who have engaged in abusive trading practices and pledged that T. Rowe Price has not entered into any agreements that authorize market timing by any of its customers.

Meanwhile, shareholders approved a reduction in the size of the firm’s board of directors from 15 members to 11. The reduction was designed to increase the number of independent directors, who now make up more than half the board. Dwight Taylor, president of commercial real estate developer Corporate Development Services, was elected to join the board as an independent director.

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