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The Journal Gazette

Tuesday, February 05, 2013 10:58 am

Takeover costs dent NYSE Euronext's Q4 profit

The Associated Press

Costs related to its upcoming takeover and debt refinancing pushed net income at exchange operator NYSE Euronext down 75 percent in the fourth quarter of last year compared with a year earlier.

The owner of the New York Stock Exchange said Tuesday it earned $28 million, or 12 cents a share, in the last quarter of 2012, compared with $110 million, or 43 cents a share, in the fourth quarter of 2011.

The company partially blamed the drop on merger costs and write-offs necessary to clear the way for its $8 billion acquisition by Intercontinental Exchange, a deal announced in December. It also paid $24 million to refinance a portion of its outstanding debt.

Excluding one-time items, the company would have earned $105 million, or 43 cents, compared with $130 million, or 50 cents a share, the year before.

Earnings for 2012 fell 29 percent to $462 million on falling trading volumes, largely related to the exceptional volatility that existed in markets in 2011. Revenues for the year fell 18 percent to $3.7 billion.

The company said its 2012 results suffered in comparison with the previous year but contended that was because 2011 was unusual given the prevailing concerns over Europe's debt crisis and the future of the euro. Amid the uncertainty, the number of trades skyrocketed - a bonus for the exchange operator.

Though an annual comparison is clouded by what occurred in 2011, NYSE Euronext does face long-term challenges.

Profit margins in stock trading have been on a downward trend for several years, as trading has become more technology-driven and commoditized. However, futures exchanges, like the Atlanta-based Intercontinental Exchange, or ICE, have been able to maintain their profits because contracts are written by exchanges and must be bought and sold in the same place. Stocks, on the other hand, can be bought and sold on any exchange.

NYSE Euronext completed its U.S. antitrust filings for the proposed merger with ICE in January and aims to hold shareholder meetings this spring, CEO Duncan Niederauer said on a call with analysts. The company is "cautiously optimistic" that the merger will be completed in the second half of the year, the executive said.

The company's stock rose 14 cents to $35.01 in morning trading.