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NYSE Euronext results falter on failed merger

April 30, 2012
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NEW YORK—The exchange operator NYSE Euronext said Monday that its first-quarter earnings tumbled 44 percent on weaker trading and its failed combination with Deutsche Boerse AG.

Its shares fell nearly 6 percent in afternoon trading.

CEO Duncan L. Niederauer said on a conference call that there has been "modest improvement in economic indicators around the world, which would generally bode well for our business."

"But unfortunately, we are still waiting for signs that trading volumes will return to the levels we have witnessed in 2010 and 2011," he told analysts.

The owner of the New York Stock Exchange reported its net income fell to $87 million, or 34 cents per share, for the January-March period from $155 million, or 59 cents per share, a year earlier.

Revenue slid 17 percent to $952 million from $1.15 billion in the first quarter of 2011.

The company said that lower volume hurt across the board, but most notably in European derivatives. A weaker European economy also hurt sales. Derivatives revenue fell 25 percent in the quarter.

Cash trading and listings revenue was also impacted by lower volume, falling 7 percent.

Sales in the Information Services and Technology Solutions unit rose 4 percent on an acquisition and higher connectivity revenue from a New Jersey data center.

Merger and exit costs for its failed combination with Deutsche Boerse also dragged down its results.

The combination would have created the world's largest exchange operator. The European Commission blocked the deal on Feb. 1, saying the pair's derivatives exchanges would have given the company a monopoly. Derivatives are complex financial instruments that allow investors to bet on changes in many areas, including interest rates, stock indexes or the price of oil.

Deutsche Boerse is suing to reverse the regulator's decision to block the $10 billion deal.

NYSE Euronext shares dropped $1.60 to $25.47 per share in afternoon trading after falling as low as $25.45 earlier in the session. The company's shares are still 21 percent above their 52-week low of $21.80 set on early October. They peaked at $41.60 almost a year ago.

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