NASDAQ OMX Group Inc.
) fourth-quarter 2012 operating earnings per share of 64 cents
modestly surpassed the Zacks Consensus Estimate of 61 cents as
well as the prior-year quarter earnings of 62 cents.
NASDAQ's GAAP net income was $85 million or 50 cents per
share, fairly higher than $82 million or 45 cents per share
recorded in the year-ago quarter. Results in the reported quarter
included net after-tax charge of $11 million or 14 cents per
share, primarily related to special legal expenses, restructuring
and other items along with merger and strategic initiatives,
partially offset by a value added tax refund.
Excluding these, net income was $108 million compared with
$113 million in the year-ago quarter. Meanwhile, total operating
income, on a non-GAAP basis, slipped 0.5% year over year to $186
Total net exchange revenues edged down 0.2% year over year to
$419 million, but exceeded the Zacks Consensus Estimate of $412
million. On a constant currency basis and excluding acquisitions,
revenue declined 3% year over year in the reported quarter.
The year-over-year weakness was primarily attributable to
significantly weak revenue from market services. While growth in
market technology revenues remained sluggish issuer services
revenue witnessed improvement. Additionally, cash equities and
derivatives continued to be feeble based on lower industry
trading volumes and an unfavorable impact from foreign
net exchange revenues for the quarter declined 3.9% from the
year-ago period to $270 million, based on slashed revenues,
partially offset by lower cost of revenues.
revenues for the reported quarter were $101 million, up 11.0%
from the year-ago period.
The upside came on the back of higher revenue from global
index group and corporate solutions, which includes the
acquisitions of BWise and Glide Technologies.
revenues were flat at $48 million in the reported quarter.
During the reported quarter, NASDAQ's order intakes surged to
$95 million from $36 million in the year-ago quarter.
Consequently, total order value (the value of orders signed that
have not been recognized as revenue) improved to $546 million
from $458 million in the prior-year quarter. New listings totaled
55 against 56 in the year-ago quarter.
Meanwhile, on a non-GAAP basis, operating expenses stood at
$233 million, in line with the year-ago period. On a GAAP basis,
total operating expenses dipped to $244 million from $259 million
in the year-ago period, primarily spurred by lower operating
costs and partially offset by slightly higher expenses on
compensation benefits along with professional and contract
services. Operating margin also came in almost flat at 44.4% from
44.5% in the year-ago quarter, led by a faltered top line.
Highlights of Full-Year 2012
For full-year 2012, NASDAQ reported operating earnings per
share of $2.50, which exceeded the Zacks Consensus Estimate of
$2.48 but lagged $2.53 recorded in 2011. Operating net income
reduced 5.1% over 2011 to $432 million.
This excluded $80 million or 46 cents per share of net
after-tax charges related to restructuring, loss on business
divestiture, special legal expenses along with merger and
strategic initiatives, partially offset by value added tax
refund. Including these, GAAP net income came in at $352 million
or $2.04 per share, lower than $387 million or $2.15 per share
recorded in 2011.
Total net exchange operating revenues inched down 1.8% year
over year to $1.65 million, but came in line with the Zacks
Consensus Estimate of $1.65 billion. GAAP operating expenses
decreased to $973 million from $986 million in the year-ago
period, although operating expenses increased 0.5% year over year
to $918 million on a non-GAAP basis. Operating margin fell to 44%
from 46% in 2011.
As of December 31, 2012, NASDAQ had cash and cash equivalents
of $497 million, down from $506 million at the end of 2011. Debt
obligations stood at $1.93 billion, down from $2.07 billion at
2011-end. Total assets decreased to $9.13 billion from $14.09
billion at 2011-end, while total equity climbed to $5.21 billion
from $4.99 billion in 2011.
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 2.1 million shares
for $50 million during the reported quarter.
Including this, the company deployed $1.17 billion in share
repurchases since January 2010, thereby buying back 53.4 million
shares at an average price of $21.97. In 2012, the company
returned $275 million to its shareholders through buybacks.
Management revealed core operating expense projection of
$910-930 million, which includes $50 million of expenses from the
acquisitions executed in 2012. Additionally, the company expects
approximately $50-60 million of incremental expenses from new
Including these charges, total operating expenses are
projected within $960-990 million. However, the cost guidance
excludes a restructuring expense related to the latest new cost
reduction plan and the voluntary accommodation program. Tax rate
is anticipated in the band of 34-37%.
Concurrently, the board declared a cash dividend of 13 cents
per share, which will be paid on March 28, 2013 to the
shareholders of record as on March 14, 2013.
On December 28, 2012, NASDAQ paid a cash dividend of 13 cents
per share to the shareholders of record as on December 14, 2012.
The cash dividend was initiated on April 25, 2012, marking the
first dividend payment in the company's history.
NASDAQ carries a Zacks Rank #3 (Hold). Meanwhile, another
player of the exchange industry -
CBOE Holdings Inc.
), a Zacks Rank #2 (Buy) stock, is slated to release its earnings
results before the market opens on February 8, 2013. Other strong
performers in the financial sector include
Euronet Worlwide Inc.
The Travelers Cos. Inc.
), both of which carry Zacks Rank #1 (Strong Buy).
CBOE HOLDINGS (CBOE): Free Stock Analysis
EURONET WORLDWD (EEFT): Free Stock Analysis
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
TRAVELERS COS (TRV): Free Stock Analysis
To read this article on Zacks.com click here.