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Piper Jaffray Has a Bad Quarter

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Piper Jaffray announced net income of $7.3 million, or $0.38 per diluted share, for the quarter ended March 31, 2005, down from net income of $13.8 million, or $0.71 per diluted share, for the quarter ended March 31, 2004.

Net income totaled $11.8 million, or $0.61 per diluted share, for the quarter ended Dec. 31, 2004. Net revenues for the first quarter were $179.1 million, down 14.5 percent from the first quarter of 2004 and down 8.0 percent from the fourth quarter of 2004.

“We were very disappointed in our results for the first quarter of 2005,” said chairman and chief executive officer Andrew S. Duff. “Reduced institutional sales and trading revenues resulted in lower quarterly earnings for the company. However, our investment banking businesses performed well against the market, and our Private Client Services business continues to make measured progress. We continue to evaluate our businesses to ensure we are directing resources to areas where we can add value to our clients, achieve appropriate profitability and sustain competitive growth.”

First quarter net revenues declined $30.3 million, or 14.5 percent, from the first quarter of 2004, primarily due to lower principal transactions and investment banking revenue. Compared to the fourth quarter of 2004, net revenues declined 8.0 percent, mainly due to lower principal transaction revenue.

For the quarter, non-interest expenses were $167.6 million, down 10.5 percent from the first quarter of 2004. Compensation expense was $109.4 million, a decline of $20.3 million, or 15.7 percent, from the prior year, primarily due to less variable compensation driven by lower net revenues and profitability. Non-compensation expenses were $58.2 million, or up 1.2 percent compared to the first quarter of last year.

Compared to the fourth quarter of 2004, non-interest expenses decreased $8.8 million, or 5.0 percent. Lower variable compensation expense was partially offset by higher benefit costs, as payroll tax limits were reset for the year. Non-compensation expense was lower across all cost categories, with the exception of floor brokerage and clearance expense, which rose due to increased activity from the new algorithmic and program trading business (APT).

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Piper Jaffray Has a Bad Quarter
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