Nasdaq OMX 4th-quarter profit rises 23 percent on lower special charges, tax payments

Monday, February 8, 2010

Nasdaq OMX profit grows even as revenue falls

NEW YORK — Nasdaq OMX Group Inc. said its fourth-quarter profit rose 23 percent on lower special impairment charges and taxes at the global exchange operator than a year earlier.

Excluding special charges, however, its earnings fell 10 percent versus a year ago.

Nasdaq OMX Group’s revenue fell as the exchange operator continues to face increasing market competition. Competing trading platforms launched in recent years have eaten away at market share held by long-standing exchange operators like Nasdaq OMX and NYSE Euronext. The increased competition has also pressured fees generated from handling trades.

Its shares fell 47 cents, or 2.5 percent, to $18.33 in morning trading.

Net income for the final three months of 2009 rose to $43 million, or 20 cents per share, from $35 million, or 17 cents per share, a year ago.

Its income tax provision fell sharply to $10 million from $38 million.

Excluding one-time impairment charges and gains on the sales of certain businesses, Nasdaq OMX Group earned $99 million, or 46 cents per share, versus $110 million, or 52 cents per share, during the last three months of 2008.

The company recorded a $51 million impairment charge and $16 million in charges tied to job cuts and other one-time items in the latest quarter. A year ago, it took a $47.4 million non-cash charge tied to a foreign currency contract and a $34.9 million non-cash impairment charge on an investment security in Oslo Bors VPS Holding ASA.

Analysts polled by Thomson Reuters, on average, forecast earnings of 45 cents per share for the fourth quarter on revenue of $364.8 million. Analysts often exclude special charges and gains in their estimates.

Net revenue, which is total revenue less rebates, brokerage, clearance and exchange fees, fell to $369 million from $403 million during the final quarter of 2008.

During the fourth quarter, 20.6 percent of U.S.-listed equities trading volume was executed on Nasdaq OMX Group’s trading platform, down from 29.2 percent during the final quarter of 2008. Total volume fell 36 percent to 126.1 billion shares.

Transaction revenue fell 17 percent to $150 million.

For the full year, Nasdaq OMX Group’s profit fell to $266 million, or $1.25 per share, from $314 million, or $1.55 per share, in 2008.

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