Oct. 28 (Bloomberg) -- Legg Mason Inc., the U.S. money manager with the worst-performing stock this year, fell to an 10-year low on concern that the bear market and investor withdrawals have hurt profits more than analysts expect.

``People probably want to sell before earnings in case they come out worse than expected,'' Alan Rambaldini, an analyst with Morningstar Inc. in Chicago, said in an interview. ``Earnings will be pretty bad because of poor fund performance, outflows and problems in their money funds.''

Legg Mason, which is set to release financial results tomorrow, will report a third straight quarterly loss because of decline in asset values and costs to prop up its money funds, according to seven analysts surveyed by Bloomberg who included the expenses in their estimates. The Baltimore-based company set aside $630 million in the past three months to cushion investors against potential losses in money funds.

Legg Mason declined 92 cents, or 6.6 percent, to $12.98 at 4:15 p.m. in New York Stock Exchange composite trading, the lowest since October 1998. The company has plunged 82 percent this year, more than any publicly traded U.S. asset manager.

The analysts expect an average loss of 48 cents a share, compared with a profit of $177.5 million, or $1.23, a year earlier. Mary Athridge, a spokeswoman for Legg Mason, declined to comment.

Dividend Unchanged

Legg Mason today said it kept its quarterly dividend of 24 cents a share. The dividend is payable on Jan. 5 to shareholders of record as of Dec. 10, the company said.

Legg Mason has been hurt by debt issued by structured investment vehicles in its money-market funds. The company has arranged for $2.78 billion in financing since last November to cover potential losses in those funds, cutting earnings.

Legg Mason has also been dragged down by outflows from its stock and bond funds, as managers including Bill Miller have trailed benchmarks.

Miller's Legg Mason Value Trust, famed for beating the Standard & Poor's 500 Index for a record 15 years, has trailed the benchmark index since 2006. This year the fund is down 56 percent, compared with the S&P 500's decline of 41 percent through yesterday.

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

Last Updated: October 28, 2008 16:42 EDT