Janus Cuts 468 Jobs From Operations Unit
Janus Capital Corp., last year’s best-selling mutual fund company, said Friday that it cut 468 jobs in its operations unit as phone and mail volume has slowed in part because customers are increasingly using the Internet for their transactions.
The layoffs, which represent 16% of the firm’s work force, are the first at the 32-year-old Denver-based company, whose volatile retail funds were hit by net redemptions in the fourth quarter amid dismal performance last year.
“This is not a cost-cutting move,” said Janus spokeswoman Shelley Peterson, who said the firm’s investment team will be unaffected. “It comes down to realizing technological efficiencies. The world is changing, and the way investors desire to reach out to us is changing with the world.”
Peterson said Web usage has spiked since the firm redesigned its site in December, adding functions such as account opening. About 20% of new accounts were opened online that month, she said, and 62% of customers who interacted with the company did so by Internet--almost double the number of two years ago.
She also said the firm’s back-office operations, such as routing and processing account applications sent in by mail, are increasingly being automated.
Nearly half the jobs eliminated were from the firm’s Austin, Texas, offices, where many of its operations are based.
Peterson said the explosive growth in call volumes that Janus saw in the late 1990s and early in 2000--as its funds rocketed along with the Nasdaq composite index--have returned to normal levels.
“It’s safe to say Janus couldn’t sustain that level of either performance or asset growth. But no one expected the coming down to Earth to be this dramatic,” said Christine Benz, senior analyst at Chicago-based fund tracker Morningstar Inc.
Investors yanked more than $2 billion from Janus’ retail funds in the fourth quarter, according to Financial Research Corp., a Boston-based consulting firm. Even so, the funds took in a net $37 billion last year, Financial Research said.
Janus, the nation’s fifth-largest fund company, with assets of $267 billion, declined to comment on its January cash flows. But Stilwell Financial Inc., parent of Janus Capital and two other money managers, said Thursday that assets under management rose 6% in January from the previous month, thanks partly to the turnaround in tech stocks.
“Janus is still really good at what they do,” Benz said. “They’re not infallible, but when it comes to growth investing they’re still the team to beat.”
So far this year, Janus’ fund performance has improved as the stock market has been more in sync with the firm’s growth-oriented style. The flagship $39-billion Janus Fund, for example, gained 8.2% in January, tops among the largest 25 mutual funds tracked by Lipper Inc. And Janus 2, the firm’s newest offering, rose 10.1% in its debut month.
Benz said shareholders in the Janus fund family will probably be unaffected by Friday’s job cuts.
“Some of the personnel was artificially pumped up to meet demand,” she said.
She said fund investors should be concerned, however, with swelling assets at the firm, which can cramp a manager’s style.
Janus Enterprise, Janus Mercury and Janus Twenty bear special watching in that regard, Benz said. Though Janus Twenty is closed to new investors, the focused fund, which typically invests in just 20 to 30 stocks, could be “somewhat limited” in its stock-picking by its $24-billion size.
Janus has shut eight of its 17 funds to new investors, which the firm says is one reason for recent outflows.
Visitors to Morningstar’s Janus message board Friday said they weren’t surprised by the job cuts, given the slowing economy, but there was a split over whether customer service will be affected.
“If you had trouble getting a [phone] rep, wait until after the layoffs!” one message said.
But another said: “Most people now use the Internet to transfer funds and check balances. I would rather deal with a machine than a human. Machines don’t have an attitude problem, and they don’t go on coffee break.”
Stilwell’s stock fell 89 cents to close at $42.11 in New York Stock Exchange trading.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Jumping Out of Janus
Net cash flows into Janus’ retail mutual funds turned negative in the fourth quarter as performance slumped.
Net cash flow (in billions of dollars)
4th quarter 2000: --2.1 billion
*
Source: Financial Research Corp.
