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Jefferies' Q3 helped by Prudential acquisition, but revenues still slide

Published: 13:09 20 Sep 2011 EDT

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Investment banking firm Jefferies Group (NYSE:JEF) announced Tuesday its third quarter results, which were boosted by its April acquisition of Prudential Bache.

For the three months ending August 31, Jefferies posted net income of $68.3 million, or $0.30 per share, up 53% from $44.8 million, or $0.22 per share, a year ago.

Of this, about $45.4 million, or $0.20 per share, was attributed to the commodities trading and derivatives business, which Jefferies bought in April for $430 million from Prudential Financial (NYSE:PRU).

Net revenues, however, slid to $509 million, from $517 million a year ago, or to $457 million excluding contributions from Prudential Bache.

Analysts were expected 26-cents in earnings, on $665.66 million in revenues.

Jefferies CEO, Richard B. Handler, commented: "Although our firm has never had a stronger capital base or a more diversified business mix, our core revenues and earnings were directly impacted by the extremely difficult and volatile operating environment, particularly in August."

Indeed, the company's principal transactions were hit hardest, posting negative $74 million in revenues during the quarter, compared to a $71 million gain a year ago.

However, the company recognized growth in its other business segments including sales from its investment banking business, which improved 19% to $293.8 million, and its revenue from asset management fees, which nearly quadrupled, to $3.1 million.

Revenues from interest and commission improved 47% to $353 million, and 31% to $154.9 million, respectively.

"We will continue to do our best to navigate this period of exceptional uncertainty with the goal of best serving our clients and shareholders," Handler concluded.

Jefferies' shares in New York rose 2.55% to $14.48 as of 12:19 pm EDT.

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