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Nasdaq OMX Q1 Profit Drops, Misses View; Initiates First Qtly Dividend

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4/25/2012 11:39 AM ET

North American stock exchange Nasdaq OMX Group, Inc. (NDAQ: Quote) reported Wednesday a profit for the first quarter that declined from last year, primarily reflecting drop in trading revenues and lower operating margins. Adjusted earnings per share and quarterly revenues missed analysts' expectations.

The company also initiated its first quarterly cash dividend in the company's history. It declared a dividend of $0.13 per share, payable on June 29 to all stockholders of record on June 15, 2012.

Further, the company implemented a cost reduction plan with a goal of $50 million in annualized cost savings by end of 2012, with $25 million savings to be realized in 2012.

Nasdaq OMX also said it has agreed to become a shareholder of LCH.Clearnet Group Ltd. after LCH.Clearnet Group's proposed acquisition of International Derivatives Clearing Group, LLC. LCH.Clearnet Group will then become the sole owner of International Derivatives Clearing.

"While we experienced a decline in our volume driven U.S. cash equity trading and U.S. derivative trading and clearing businesses compared to the prior year quarter, these declines were almost completely offset by growth in our other businesses," President and CEO Bob Greifeld said in a statement.

The New York-based exchange reported net income of $85 million or $0.48 per share for the first quarter, lower than $104 million or $0.57 per share in the prior-year quarter.

Excluding one-time items, adjusted earnings per share for the quarter remained flat at $0.61. On average, 17 analysts polled by Thomson Reuters estimated earnings of $0.63 per share for the first quarter. Analysts' estimates typically exclude special items.

Market services revenues for the quarter were $666 million, down from $683 million in the comparable quarter a year ago.

Total revenues, excluding liquidity rebates, brokerage, clearance and exchange fees, edged down to $411 million from $413 million in the same quarter last year, and missed Wall Street analysts' consensus estimate of $416.92 million.

On a constant currency basis, net exchange revenues increased 1 percent from the prior-year quarter.

Operating income for the quarter decreased to $171 million from $183 million in the year-ago quarter. Adjusted operating income was $182 million, down from the prior-year quarter, with operating margins contracting 200 basis points to 44 percent from last year's 46 percent.

During the first quarter, the company got a total of 43 new listings, including 21 initial public offerings, compared to total listings of 34 in the first quarter of 2011.

Lee Shavel, NASDAQ OMX's EVP and CFO, said, "We are pleased to be taking the next step in our capital return strategy, initiating a cash dividend to complement our ongoing share repurchase program as a means of returning capital to our shareholders.

In Wednesday's regular trading session, NDAQ is currently trading at $25.10, down $0.24 or 0.95% on a volume of 1.85 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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