NASDAQ OMX Group Inc.
) third-quarter 2012 operating earnings per share of 62 cents
surpassed the Zacks Consensus Estimate by a couple of cents.
However, it fell shy of the prior-year quarter's earnings of 67
NASDAQ's GAAP net income came in at $89 million or 52 cents
per share, lower than $110 million or 61 cents per share recorded
in the year-ago quarter. Results in the reported quarter included
net after-tax charge of $14 million or 10 cents per share,
primarily related to losses on sale of business, restructuring
and other items along with merger and strategic initiatives.
Excluding these, net income was $105 million compared with
$121 million in the year-ago quarter. Meanwhile, total operating
income, on non-GAAP basis, slipped 11.3% year over year to $181
Total net exchange revenues declined 6.2% year over year to
$424 million, but exceeded the Zacks Consensus Estimate of $410
million. The year-over-year downside was primarily attributable
to significantly weak revenue from market services, while growth
in issuer services and market technology revenues remained
sluggish. Additionally, cash equities and derivative continued to
be feeble based on lower industry trading volumes and unfavorable
impact from foreign exchange.
net exchange revenues for the quarter dropped 10.3% from the
year-ago period to $269 million, based on slashed revenues,
partially offset by lower cost of revenues.
revenues for the reported quarter were $93 million, climbing 3.3%
from the year-ago period on the back of slightly higher revenue
from global index group, global listing services and corporate
revenues inched up to $47 million from $46 million in the
During the reported quarter, NASDAQ's order intakes dipped to
$31 million from $35 million in the year-ago quarter. However,
total order value (the value of orders signed that have not been
recognized as revenue) strengthened to $523 million from $473
million in the prior-year quarter.
Meanwhile, on a non-GAAP basis, operating expenses marginally
reduced to $228 million from $232 million in the year-ago period,
primarily spurred by lower general and administrative as well as
depreciation and amortization expenses along with lower
These partially offset by incremental spending for
professional and contract services. On a GAAP basis, total
operating expenses dipped to $239 million from $241 million in
the year-ago period. Operating margin fell to 44% from 47% in the
year-ago quarter, led by a weak top line.
As of September 30, 2012, NASDAQ had cash and cash equivalents
of $438 million, down from $506 million at the end of 2011. Debt
obligations stood at $1.94 billion, down from $2.07 billion at
2011-end. Total assets decreased to $8.92 billion from $14.09
billion at 2011-end, while total equity climbed to $5.14 billion
from $4.99 billion during the same comparable period.
On October 12, 2011, NASDAQ declared a new capital plan,
according to which the board of NASDAQ approved a new stock
repurchase program worth $300 million through open market
operations. Accordingly, NASDAQ bought back 2.2 million shares
for $50 million during the reported quarter.
Including this, the company has deployed $1.12 billion in
share repurchases since January 2009, thereby buying back 51.3
million shares at an average price of $21.90. In the first nine
months of 2012, the company has returned $225 million to its
shareholders, through buybacks and $43 million through dividend
For 2012, NASDAQ management further lowered the operating
expense outlook to the range of $865-873 million from the prior
projection of $870-890 million. This excludes approximately
$32-36 million of incremental expenses from new initiative
spending, and about $25-26 million related to BWise and NOS
acquisitions. However, including these charges, total operating
expenses are projected to be within $922-935 million, down from
prior estimate of $935-965 million.
NASDAQ reiterated that the new cost reduction plan aims to
generate cost savings at an annualized run rate of $50 million by
the end of 2012, with $25 million to be realized in 2012. This is
reflected in the company's revised expense outlook, although it
excludes a restructuring expense related to this plan and
voluntary accommodation program.
Concurrently, the board of NASDAQ declared a cash dividend of
13 cents per share, which will be paid on December 28, 2012 to
the shareholders of record as on December 14, 2012.
On September 28, 2012, NASDAQ paid a cash dividend of 13 cents
per share to the shareholders of record as on September 18, 2012.
The cash dividend was initiated on April 25, 2012, marking the
first dividend payment in the company's history.
During the reported quarter, NASDAQ processed 18 initial
public offerings (IPOs), at par with the year-ago period, while
new listings totaled 44 against 38 in the year-ago
Meanwhile, NASDAQ's arch-rival
NYSE Euronext Inc.
) is slated to release its earnings results before the market
opens on November 6, 2012.
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
NYSE EURONEXT (NYX): Free Stock Analysis
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