Dec. 5 (Bloomberg) -- Legg Mason Inc., the Baltimore-based fund manager that has lost three-quarters of its market value this year, will cut about 200 jobs, or 8 percent of its workforce, as it seeks to lower annual expenses by $120 million.

The layoffs “reflect the realities of continued severe market conditions,” Mary Athridge, a spokeswoman for Legg Mason, said today in an e-mail. Dismissals will be mainly among U.S. workers in non-investment departments including marketing, technology, finance and legal.

The company has posted three straight unprofitable quarters because of $977 million in costs to prop up money funds and a 16 percent drop in client assets to $841.9 billion. Legg Mason said it expects to reach its cost-reduction goal by March 31.

“They’ve been aggressive in cutting costs and in timing,” Daniel Fannon, an analyst with Jefferies & Co. in San Francisco, said in an interview. “That’s something we view positively.” Fannon rates Legg Mason shares as “buy,” and doesn’t own any.

U.S. money managers have eliminated more than 4,200 jobs in the past two months in response to the worst stock-market declines since the Great Depression. Fidelity Investments is dismissing 3,000 people, or 7 percent of its workforce, while BlackRock Inc. is cutting an undisclosed number of jobs.

‘Unfortunate’

Legg Mason’s job cuts are an “unfortunate but necessary step in achieving sustainable cost savings in a period of unprecedented market turmoil,” Mark Fetting, chief executive officer of Legg Mason, said in a memo sent to employees late yesterday. Employees who are being dismissed will be informed by the end of today, according to the memo.

Legg Mason rose $1.70, or 10 percent, to $18.15 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has dropped 75 percent this year, compared with the 40 percent decline by the Standard & Poor’s 500 Index.

Legg Mason said its savings from job reductions and other measures equal 20 percent of its $600 million in annual corporate spending. Those expenses exclude costs from the company’s money-management affiliates.

No investment management jobs were eliminated. Each of Legg Mason’s investment units will make job-cut determinations independently, Athridge said. Bill Miller’s Legg Mason Capital Management unit eliminated about 50 jobs, one-third of its total, in October.

Legg Mason’s assets declined 8.8 percent in the three months ended Sept. 30, including $60.9 billion from market depreciation. Customers pulled $21 billion from Legg Mason’s stock and bond funds during the period.

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

Last Updated: December 5, 2008 16:17 EST