Bloomberg News

NYSE Second-Quarter Earnings Beat Estimates as Costs Cut

August 03, 2012

NYSE Euronext (NYX:US), the biggest U.S. exchange operator, reported second-quarter earnings that beat estimates and cut its cost guidance for the year. The shares rose for the first time in five days.

Second-quarter profit excluding some items fell to 51 cents a share, compared with 61 cents a year ago as equity and derivatives trading dropped. That exceeded the 50-cent average estimate (NYX:US) of analysts surveyed by Bloomberg, whose projections ranged from 48 cents to 52 cents. Net income declined 20 percent to $128 million from $160 million a year earlier, the New York- based company said in a statement.

“Ongoing strategic initiatives, combined with our cost reduction plan and lower share count from stock repurchases, should position the company for a return to earnings growth in 2013 and beyond,” said Chief Financial Officer Michael Geltzeiler in a statement today.

Average daily volume of U.S. exchange-listed securities during the second quarter fell 4.5 percent to 6.82 billion shares, according to data compiled by Bloomberg. NYSE Euronext’s revenue benefits when trading volume rises. Chief Executive Officer Duncan Niederauer lowered his forecast in June for the company’s technology business, a unit meant to bring in a greater portion of revenue over the next few years.

The exchange said costs for 2012 will be under $1.58 billion, compared with an earlier estimate of as much as $1.6 billion. The shares rose 1.7 percent to $25 at 1:43 p.m. in New York today.

Trading Breakdown

Niederauer said today that the exchange’s software is robust and wasn’t at fault after Knight Capital Group Inc. had a trading breakdown. NYSE Euronext reviewed 140 securities, including Bank of America Corp., Caterpillar Inc. and Pfizer Inc. In a decision made with regulators that it said isn’t subject to appeal, NYSE canceled trades in six where prices swung at least 30 percent in the first 45 minutes.

“As we said Wednesday, the systems on the NYSE performed normally,” he told analysts on a call today. “The market model we have here helped us flag this issue sooner than I think others would have been able to. Within minutes we were in contact with Knight to begin working through the issue with them.”

Nasdaq OMX Group Inc., (NDAQ:US) the second-largest U.S. equity exchange operator, posted second-quarter earnings that exceeded analyst estimates on July 25. Deutsche Boerse AG (DB1), in Frankfurt, reported higher-than-projected profit on July 26.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net


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