Nasdaq OMX Group 1Q net income climbs 71 pct

AP News
Posted: Apr 20, 2011 1:49 PM
Nasdaq OMX Group 1Q net income climbs 71 pct

Nasdaq OMX Group Inc. is prepared to fight to become the operator of the New York Stock Exchange _ for the next year at least.

The company has a plan in place through April 2012 to see through its $11.3 billion joint bid with IntercontinentalExchange Inc. for NYSE Euronext Inc., CEO Robert Greifeld said Wednesday in an analyst conference call. Nasdaq will also pursue shareholder support directly if the NYSE board refuses to consider the offer, he said.

The combative stance follows the release of earnings results earlier on Wednesday in which Nasdaq said first-quarter net income surged 71 percent on robust derivative trading and clearing revenues.

The global exchange operator said it earned $104 million, or 57 cents per share, for the period ended March 31. That's up from $61 million, or 28 cents per share, a year earlier.

The latest quarter's results included $9 million of expenses related to merger and strategic initiatives, a sublease loss reserve and other items. Adjusted earnings rose to 61 cents per share from 43 cents per share.

Revenue climbed 15 percent to $415 million from $360 million, topping Wall Street expectations of $409.7 million. Total derivative trading and clearing revenue rose 31 percent to $80 million.

Even with the results, Nasdaq OMX has been losing market share to smaller operators like BATS Exchange and Direct Edge as technology drives down the costs of trading. New exchanges mean cheaper fees and better trade execution for smaller investors. But it has forced larger operators to grow even bigger, through acquisitions, to ensure their survival.

Greifeld said Wednesday that the combination of Nasdaq and the NYSE's global stock exchanges would create the world's "leading cash equity marketplace."

"It will be the undisputed leader," he said.

Under the deal terms, Nasdaq would also get the options business, while ICE would take on NYSE Euronext's lucrative derivatives business.

Nasdaq OMX and ICE said Tuesday that financing had been lined up for their unsolicited takeover bid. The companies also offered to pay the owner of the NYSE a hefty sum if regulators reject the deal.

Earlier in the month NYSE Euronext rejected the Nasdaq OMX/ICE bid in favor of a $10 billion offer by German exchange operator Deutsche Boerse AG.

NYSE Euronext called the Nasdaq OMX/ICE offer "highly conditional" and said it would have caused unnecessary risk for shareholders.

The proposed merger of Deutsche Boerse and NYSE Euronext would create the world's largest stock exchange operator.

Nasdaq and ICE are seeking to meet with the NYSE Euronext board on their proposal. The companies complained earlier this month that their offer was rejected without discussion.

"We are uninvited, but we will continue to strive to enter into friendly discussions and hopefully have the opportunity to discuss how our transaction is best for investors over the short and medium term," Greifeld said on the conference call Wednesday. "We are committed to pursuing our bid to the end."

Nasdaq OMX and ICE said they have arranged for $3.8 billion in financing and are prepared to pay $350 million to NYSE Euronext if they are unable to get antitrust regulators' approval for the deal.

NYSE is expected to hold its annual stockholders meeting on April 28.