Tony James, the company's president and COO, said during a conference call with media members that the current downturn is a "depression," though not as severe as the Great Depression of the 1930s.

Blackstone Group suffered as the value of investments were hurt, though the company is confident it can handle even worse scenarios in the future because of its conservative investment strategy and ample liquidity, James said during the call.

The buyout shop, which makes its money buying distressed companies and then selling them for a profit, said it lost $415.2 million, or $1.52 per common unit, during the quarter. Blackstone lost $170 million, or 65 cents per common unit, during the same quarter a year earlier.

The company's "economic net loss," which excludes compensation charges tied to its initial public offering, totaled $827.1 million during the fourth quarter, compared with income of $128.2 million during the same quarter in 2007. Blackstone went public at the peak of the private equity boom in June 2007.

Shares of Blackstone Group dipped sharply at the opening of trading to a record low of $3.55, but rebounded later in the day to close up $1, or 26 percent, at $4.87. The company's shares have been hammered since it went public, having traded as high as $38 during its first trading day.

James that if the stock price fell further, the firm would have to consider buying shares. He noted that he doesn't foresee Blackstone Group going private again by buying up all the outstanding stock.

As the ongoing credit crisis has mushroomed, the value of the companies Blackstone controls have tumbled. That has pressured its quarterly results. Blackstone Group saw the value of investments fall across many of its portfolios, including its corporate private equity and real estate portfolios.

Blackstone Group does not pay attention to quarterly fluctuations in the value of the companies it has no plans to sell in the near future, James said. Sales are unlikely to occur in 2009 and probably even 2010 as the market remains in turmoil, he added.

That means companies will likely be held for about five or six years from initial purchase instead of the average of about three and a half years seen during the boom in the sector, James added. A recovery in the market would allow Blackstone Group to reverse some of the write-downs it has taken on its investments or record outright profits if it sells businesses during a rebound.

James noted Blackstone Group altered its investment strategy in 2006 to avoid purchasing cyclical companies that typically get stung by economic downturns, as the buyout firm was anticipating an economic slowdown. But, James said, Blackstone Group did not anticipate the size and scope of the current downturn.

While the value of its investments tumbled during the quarter, the company was still able to generate $381.4 million in management and advisory fees. Blackstone Group generated $447.5 million in management and advisory fees during the final quarter in 2007.

Despite the mounting losses, the company says its liquidity is strong enough to handle the downturn. Blackstone said it has $767.6 million in available cash as of Jan. 31 after paying off the entire $250 million balance on its revolving credit facility.

"Even if the markets turn significantly worse than today, we can weather the storm," James said.

Amid the weakening market, Blackstone Group said it would not issue a dividend to common unit holders for the fourth quarter. Blackstone had paid a total of 90 cents per common unit for the first three quarters of 2008. Blackstone's chairman and chief executive, Stephen Schwarzman, and co-founder, Peter Peterson, also did not receive any bonuses for the year.

For the full year, Blackstone Group reported a net loss of $1.16 billion, compared with profit of $1.62 billion in 2007.