Nasdaq misses estimates on trading revenue, starts dividend

Nasdaq in Times Square Nasdaq in Times Square

April 25 (Bloomberg) -- Nasdaq OMX Group Inc., the second- largest U.S. equity exchange operator, posted first-quarter earnings that missed analyst estimates on lower trading revenue and said it is initiating a dividend.

Earnings were 61 cents a share excluding some items, the New York-based company said in a statement today, missing the 63-cent average estimate of analysts surveyed by Bloomberg. Revenue excluding rebates, clearing and other fees fell 0.5% to $411 million, while net income attributable to Nasdaq OMX dropped 18% to $85 million.

Nasdaq OMX had exceeded or matched projections every quarter since the period ending June 2010. The exchange is cutting costs as equity trading slows and competition deepens. The company plans to finish the rest of its $300 million stock- repurchase plan this year, Chief Executive Officer Robert Greifeld said in February.

“While results were a bit soft, we believe the primary focus will be on the company’s new dividend and cost cutting program, which should drive upside,” Alex Kramm, an analyst at UBS AG, wrote in a note today.

Greifeld said today that the company plans to pay a quarterly cash dividend of 13 cents a share on June 29. NYSE Euronext, the biggest operator of U.S. equity exchanges, began paying a dividend in 2007.

Dividend decision

“Our decision to put a dividend in place reflects the strong cash flow and capital generation of our business and our commitment to deliver meaningful capital returns to our shareholders through both dividends and continued share repurchases,” he said in a statement.

The stock fell 0.4 percent to $25.23 at 9:41 a.m. New York time. It rose 3.4 percent this year through yesterday, less than the 8.9 percent rally for the Bloomberg World Exchanges Index of 25 companies worldwide. Nasdaq OMX trades for 9.9 times reported earnings, compared with the index’s price-to-earnings ratio of 16.3, data compiled by Bloomberg show.

The company cut debt by $110 million and bought back $50 million of stock last quarter, according to today’s statement. It has repurchased $950 million of stock since the start of 2009, at an average price of $21.66. The average traded price since then is $22.27, data compiled by Bloomberg show.

Nasdaq OMX lowered its total operating expense forecast for 2012 to $920 million to $950 million, compared with a range of $955 million to $985 million the company gave in February.

Revenue, Derivatives

Net stock trading revenue in the U.S. and Europe fell 15 percent to $53 million, while derivatives trading sales slipped 7.5 percent to $74 million, Nasdaq OMX said today. As a result, overall net transaction fee revenue declined 5.6 percent to $184 million from the year ago period.

NYSE Euronext is scheduled to issue its quarterly report on April 30. The average analyst projection is for 47 cents a share in profit, compared with 68 cents in the year-earlier period, according to data compiled by Bloomberg. Deutsche Boerse AG, the Frankfurt-based exchange whose offer to buy NYSE for $7.5 billion was rejected by the European Union in February, will post earnings results on April 27.

Bloomberg News

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