T. Rowe Price reported a 27% drop in quarterly earnings, citing continued weakness in stock market valuations amid a grinding bear market.

The Baltimore-based investment management firm posted a first-quarter net profit of $38.8 million, or 31 cents a share, down from the $53 million, or 41 cents a share, it earned in the year-ago period. The results were ahead of Wall Street's expectations of 29 cents a share, according to a 12-analyst poll conducted by research firm Thomson Financial/First Call, parent company of the publisher of this newsletter.

Total revenue slipped to $218.7 million from $242 million last year. Advisory fee revenue for the quarter fell to $164.4 million from $188.5 million. Assets under management fell to $139.9 billion from $159.6 billion at the end of the year-ago quarter.

Chairman and President George Roche said in a prepared statement that with the war in Iraq moving toward a favorable resolution, the remainder of the year should be one of an improving environment for both the financial markets and the company.

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