NYSE Second-Quarter Profit Falls 16%, Beats Forecast

Tuesday, 02 Aug 2011 09:19 AM

 

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NYSE Euronext, the U.S. exchange company planning to be bought by Deutsche Boerse AG, said second-quarter profit declined as revenue from European derivatives and U.S. equity trading declined.

Net income fell 16 percent to $154 million from $184 million a year earlier, the New York-based company said today in a statement. Excluding some items, earnings dropped to 61 cents a share, exceeding the 60-cent average estimate of 11 analysts surveyed by Bloomberg.

The New York Stock Exchange operator’s planned purchase by Deutsche Boerse would create the world’s largest exchange operator, expanding NYSE Euronext’s revenue from European derivatives. Some of NYSE Euronext’s sales depends on the volume of shares that change hands each day, and trading on U.S. exchanges last quarter fell 9.6 percent from the first quarter, according to the daily average compiled by Bloomberg.

It’s a “decent beat relative to our expectations and the Street, driven by both higher revenues and lower expenses,” Alex Kramm, New York-based analyst at UBS AG wrote in an e- mailed comment on the earnings. “Despite the earnings upside on a standalone basis we do not expect results to be a meaningful driver of the stock today as investor focus remains on the pending merger.” He has a “buy” recommendation on NYSE.

Shares Decline

NYSE Euronext shares fell 2.1 percent to $32.28 in Paris trading today. The stock had declined 1.2 percent since the company confirmed in February that it’s in talks about a merger with Deutsche Boerse. That drop compares with a 3.7 percent advance for the Bloomberg World Exchanges Index.

NYSE Amex sold almost 53 percent of its options market to seven brokers, winning regulatory approval for the plan last quarter. Sandler O’Neill & Partners LP’s Rich Repetto estimated that the remutualization of the options exchange lowered earnings by 7 cents a share last quarter.

“With the Amex deal now closed, NYSE Euronext will share profits from the Amex options business with its partners,” Repetto, a New York-based analyst with the firm, wrote in a July 6 note.

Deutsche Boerse, in Frankfurt, reported last week second- quarter profit that rose 11 percent as it cut costs, while Nasdaq OMX Group Inc., NYSE Euronext’s smaller rival, posted quarterly earnings that beat analyst estimates, as acquisitions and listings services helped boost revenue.

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