NYSE Euronext Profit Falls as European Derivative Trading Slows

By Nandini Sukumar and Edgar Ortega

Oct. 31 (Bloomberg) -- NYSE Euronext, the world's largest owner of stock exchanges, said third-quarter profit declined 33 percent after it cut fees and trading slowed on the European derivatives market.

Net income fell to $174 million, or 66 cents a share, from $258 million, or 97 cents, the New York-based company said in a statement today. Excluding some costs, profit was 72 cents, matching the 72-cent average estimate of 18 analysts surveyed by Bloomberg News.

Chief Executive Officer Duncan Niederauer is seeking to sustain growth even if trading slows by cutting staff and overhauling trading systems to run more cheaply. NYSE Euronext has also had to give price breaks to some of its biggest customers trading equities in the U.S. to fend off competition from Chi-X Europe Ltd. and Nasdaq OMX Group Inc.

``The Euronext merger integration is poised to pick up pace in 2009,'' Patrick Pinschmidt, an analyst at Morgan Stanley who has an ``underweight'' rating on the stock, wrote in an Oct. 28 report. ``But looking ahead, we are concerned that less robust top-line growth will be exacerbated by expense uncertainty.''

NYSE Euronext rose $1.93 to $28.10 in New York yesterday. The stock has lost 68 percent this year, compared with a 64 percent drop in the FTSE/Mondo Visione Exchanges Index.

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.