By Whitney Kisling and Nandini Sukumar
Oct. 30 (Bloomberg) -- NYSE Euronext, the world’s largest owner of stock exchanges, reported a 28 percent decline in third-quarter profit as revenue from equity trading dropped and European competitors took market share.
Net income fell to $125 million, or 48 cents a share, from $174 million, or 66 cents, a year earlier, the New York-based company said today in a statement. Excluding some costs, profit was 53 cents a share, beating the 46 cent average of 17 analysts surveyed by Bloomberg. NYSE Euronext said in a separate statement that it signed agreements with a group of banks and liquidity providers to sell a stake in NYSE Liffe U.S., the company’s U.S. futures exchange.
Chief Executive Officer Duncan Niederauer boosted rebates for NYSE’s biggest customers and cut fees at two options exchanges in the past year to stem losses in market share in Europe and the U.S. to newer competitors such as Chi-X Europe Ltd. and Direct Edge Holdings LLC. He also eliminated at least 62 U.S. jobs this year after cutting about 230 in 2008 and said last quarter he may surpass a goal of cutting $175 million in costs this year.
“Recent results have been a step in the right direction as management continues to realize synergies and control expenses,” Howard Chen, an analyst with Credit Suisse Group AG New York, wrote in a note Oct. 7. “We balance this against our outlook for a pullback in industry-wide volumes and further competitive pressures.”
Paris Trading
NYSE Euronext gained 1.2 percent to $27.92 at 9:37 a.m. in Paris trading. The stock has risen less than 1 percent in New York this year, compared with a 48 percent jump in the FTSE/Mondo Visione Exchanges Index that tracks 18 bourses.
NYSE Euronext’s trading volume in U.S. equities and European derivatives fell in September from the same month last year, when Lehman Brothers Holdings Inc. filed for bankruptcy and the financial crisis followed. During the 2008 month, U.S. trading volume climbed more than 50 percent with a surge in volatility, according to data from NYSE Euronext.
The company’s share of U.S. equity trading in September 2009 fell to 28 percent from 34.3 percent a year earlier. NYSE’s Euronext had a similar decline in European equities trading in September, as its share of France’s CAC 40 Index volume dropped to 46 percent from 55 percent a year earlier, according to data compiled by Thomson Reuters.
Market Share
“NYSE Euronext has lost significant market share in its U.S. cash markets over the last years,” Mike Vinciquerra, an Atlanta-based analyst with BMO Capital Markets, wrote in an Oct. 12 note. “Share losses in the European cash business are evident and likely to continue for the foreseeable future, and volume at NYSE Liffe remains soft. Overall, revenue growth remains a challenge for NYSE.”
Nasdaq OMX Group Inc., operator of the second-largest U.S. stock exchange, is set to report earnings Nov. 5, along with Deutsche Boerse AG, the No. 2 exchange operator. CME Group Inc., the world’s largest futures market, yesterday posted a 20 percent rise in profit as the average rate it charges per contract increased.
To contact the reporters on this story: Whitney Kisling in New York at wkisling@bloomberg.net; Nandini Sukumar in London at nsukumar@bloomberg.net.
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