The 2nd largest equity exchange of US, the NASDAQ OMX Group Inc. has reported the 4th quarter earnings and the same has been able to beat the estimates of the analysts’. The company decided to cut costs and this has been one of the main reasons why it has been able to get better profits despite a decline in the overall stock market trading scenario.
The profit for the last 3 months of 2012 is at $85 billion for NASDAQ from $82 billion of the previous 3 months. Per share profits have also jumped up to 50 cents from 45 cents. The company actually earned 64 cents per share in the 4th quarter, excluding some of the costs. This is higher than the 61 cents per share earnings predicted by most of the analysts. Yesterday, NASDAQ reached to its highest figures in last 21 months; however, it declined by 1.2% on today and is at $27.64 currently.
Robert Greifeld, the Chief Executive Officer of NASDAQ, has decided to re-organize the business units and cut the overall costs, because of the shrunk in the revenues from all over the world. It has also decided to expand to the derivatives market and has already set up a new London based market. This new exchange has been named as NLX and the same is currently looking forward to grab more than 10% of the overall UK based transactions right in the 1st year of its operations. NASDAQ has also bought 25% stake in a Dutch alternative trading system which is more based on equity derivatives and the stocks. Greifeld has already stated that they are looking forward at relatively flat costs for the business. He also reminded everyone that NASDAQ has a reputation of over delivering and under promising.
The biggest rival of NASDAQ, NYSE Euronext incidentally agreed to be taken over by IntercontinentalExchange on last month. This deal kind of underscored the increasing importance of the derivatives. Greifeld, however, does not see any change in the competition because of this deal. He commented that the aggressive competition that they have with NYSE is expected to continue even after the acquisition is completed.
Excluding the rebates, clearing and other associated fees, the net revenue was at $419 million for 4th quarter for NASDAQ, in comparison with $420 million of a year ago.