Nasdaq OMX Group Inc. (NDAQ) Wednesday reported a sharply lower first-quarter profit, mostly on expenses incurred by the stock exchange operator to compensate members impacted by the Facebook IPO last May. However, quarterly earnings topped Wall Street estimates.
Net revenues, meanwhile, edged up one percent from last year, on growth in Global Technology Solutions and Global Information Services segments, partly offset by lower U.S. cash equity trading revenues.
Nasdaq spent $62 million to compensate its stock market members for losses arising directly from the system issues experienced with the Facebook IPO. The program was approved by the SEC in March. Nasdaq said it also may pay $10 million in connection with the potential resolution of the matter.
Nasdaq reported first-quarter net income of $42 million or $0.25 per share, compared to $85 million or $0.48 per share last year.
Excluding items, adjusted earnings for the quarter would have been $0.64 per share, compared to $0.61 per share a year ago.
On average, 14 analysts polled by Thomson Reuters expected earnings of $0.62 per share for the quarter. Analysts' estimates typically exclude special items.
Net exchange revenues for the quarter grew to $418 million from $414 million in the prior year.
Analysts estimated revenues of $418.41 million for the quarter.
On an organic basis, net exchange revenues were down 2 percent.
Non-transaction based revenues were 72 percent of net exchange revenues, compared to 69 percent in the prior year.
In a bid to diversify into the electronic fixed income business, Nasdaq earlier this month agreed to acquire the eSpeed platform business from BGC Partners Inc. (BGCP) for about $1.23 billion. The deal is expected to close sometime mid-2013.
Nasdaq believes the deal will be accretive to earnings within the first twelve months after closing, excluding transaction-related costs, and generate attractive returns on capital.
In March, Nasdaq said it was granted early termination of the waiting period under the Hart-Scott-Rodino Improvements Act of 1976 with respect to its acquisition of three units of Thomson Reuters Corp. ( TRI, TRI.TO). Nasdaq in December agreed to acquire the businesses for $390 million in cash.
Looking forward in 2013, Nasdaq said that a recovering economy and increasing investor confidence will lead to stronger tailwinds for its businesses.
Nasdaq stock is trading at $27.76, down 2.49%, on a volume of 0.9 million shares.
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