Nov. 17 (Bloomberg) -- BlackRock Inc., the largest publicly traded asset manager in the U.S., will cut jobs as slumping financial markets erode its profit, the first layoffs since Laurence Fink started the company in 1988.

``These are extraordinary times,'' New York-based BlackRock said today in a memo to employees, a copy of which was obtained by Bloomberg News. ``Times like these require fiscal discipline; we expect it of the companies in which we invest and we must expect it of ourselves.''

Employees will be notified this week, according to the memo. Details on the number of jobs to be eliminated and the divisions affected won't be disclosed until after the end of the year, said Bobbie Collins, a BlackRock spokeswoman. The company, which manages $1.26 trillion, employs about 5,500 people worldwide.

BlackRock's third-quarter earnings fell 15 percent as investors unnerved by the financial crisis pulled money from its stock, bond and money-market funds, the company said Oct. 21. Putnam Investments said today it fired 12 money managers after assets fell 39 percent in the past year, joining Fidelity Investments and Janus Capital Group Inc. in contracting amid the steepest stock-market losses since the 1930s.

The Wall Street Journal reported BlackRock's planned layoffs earlier today.

`Capitulation' Seen

Fink, BlackRock's chief executive officer, said last week he's seeing signs of ``capitulation'' in financial markets, a broad selloff that usually comes before the end of a bear market.

``A year ago, I said we won't see a bottom until we see a capitulation,'' Fink, said at a Nov. 11 investment conference in New York. ``We are seeing a capitulation'' and financial markets may begin to recover by mid-2009, said Fink, 56.

The bankruptcy in September of Lehman Brothers Holdings Inc. and losses at a money-market fund run by Reserve Management Corp. triggered $53.8 billion in withdrawals from BlackRock's cash and securities-lending funds during the three months ended Sept. 30. Investors also pulled $6.7 billion from stock and bond funds.

BlackRock's assets fell 12 percent from the prior quarter, driven by the outflows and $69.1 billion of market depreciation in its stock funds.

Fidelity, based in Boston, is cutting 3,000 jobs, or 7 percent of its 44,400-member workforce, after assets declined about 13 percent in the first nine months of the year. Denver- based Janus is eliminating about 115 jobs, or 9 percent, to cut costs and AllianceBernstein Holding LP of New York is making unspecified job reductions. Legg Mason's stock-fund unit led by Bill Miller is cutting about one-third of its 150 jobs.

To contact the reporters on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net.

Last Updated: November 17, 2008 20:35 EST