Nasdaq 4Q profit edges higher despite weak trading
NEW YORK (AP) — The Nasdaq OMX Group saw fourth-quarter profits rise nearly four percent as a significant acceleration of corporate activity offset weaker volumes.
Nasdaq, which operates its namesake stock market along with two dozen other trading platforms and clearinghouses in the U.S. and Europe, also said Thursday that cost-cutting measures boosted the results.
For the three months ended Dec. 31, the company posted net income of $85 million, or 50 cents per share, compared with $82 million, or 45 cents per share, in the 2011 quarter.
Stripping out one-time costs related to restructuring, mergers, special legal expenses and other items, adjusted profit was 64 cents per share for the final three months of 2012. That tops Wall Street estimates of 61 cents, according to a poll by FactSet.
While revenue fell slightly to $419 million, it easily topped analyst expectations of about $413 million.
Net exchange revenues fell 4 percent to $270 million, as gains in derivatives and access and broker services could not offset a 20 percent plunge in net cash equity trading revenue, and a 4 percent drop in market data revenues.
But revenue from the unit that provides press release distribution, communications and information management, rose 11 percent to $101 million. The gains reflect efforts by the company to diversify and not rely so heavily on revenue from trading. Nasdaq OMX took another step in broadening this portion of its business during the quarter, announcing the acquisition of investor relations, public relations and multimedia businesses from Thomson Reuters for $390 million.
Nasdaq said expenses fell 6 percent to $244 million during the quarter, reflecting previously-announced efforts to trim costs.
CEO Bob Greifeld said a pickup in corporate activity and strong performance in its options, proprietary data and global index businesses helped drive profit in the quarter. There were 19 initial public offerings on the Nasdaq during the quarter, up from 15 a year earlier.
Volume remained weak, he said. Total U.S. equity average daily volume dropped 18 percent to 6.09 billion shares. U.S. options trading volume fell 8 percent.
An increase in the amount investors are putting into U.S. equity mutual funds is a positive sign for the first few weeks of 2013, Greifeld said.
According to the Investment Company Institute, investors added money to stock mutual funds for the third straight week in the period ended Jan. 23 — reversing a trend of net outflows dating back to July.
For the year, Nasdaq's net income slipped to $352 million, or $2.04 per share, from $387 million, or $2.15 per share. Revenue fell to $2.56 billionfrom $2.88 billion.
Nasdaq's board declared a quarterly dividend of 13 cents, payable March 28 to shareholders of record on March 14.
Shares of Nasdaq OMX Group Inc. closed Wednesday at $27.97, up about 12 percent since the start of the year.