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NYSE Euronext (NYX)

Q4 2010 Earnings Call

February 08, 2011 8:00 am ET


Michael Geltzeiler - Chief Financial Officer and Group Executive Vice President

Duncan Niederauer - Chief Executive Officer and Director

Stephen Davidson - Vice President of Investor Relations

Lawrence Leibowitz - Chief Operating Officer and Member of Management Committee


Rob Rutschow - Credit Agricole Securities (USA) Inc.

Richard Repetto - Sandler O`Neill

Kenneth Worthington - JP Morgan Chase & Co

Michael Vinciquerra - BMO Capital Markets U.S.

Howard Chen - Crédit Suisse AG

Christopher Brendler - Stifel, Nicolaus & Co., Inc.

Christopher Harris - Wells Fargo Securities, LLC

Daniel Fannon - Jefferies & Company, Inc.

Roger Freeman - Barclays Capital



Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year 2010 NYSE Euronext Earnings Conference Call. My name is Towanda, and I will be your operator today. [Operator Instructions] I would now like to turn the call over to Stephen Davidson, Head of Investor Relations at NYSE Euronext. Please go ahead, sir.

Stephen Davidson

Thank you, Towanda. Good morning, and welcome to the NYSE Euronext Fourth Quarter and Full Year 2010 Earnings Conference Call.

Before I introduce today's speakers, let me remind you that comments on the call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause NYSE Euronext's actual results to differ materially from those in the statements. These forward-looking statements speak as of today, and you should not rely on them as representing our views in the future. Please refer to our SEC filings for a full discussion of the risk factors that may affect any forward-looking statements. Except for any obligation to disclose material information under the Federal securities laws, NYSE Euronext undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after this conference call.

We will discuss non-GAAP financial measures during this call. These non-GAAP measures are fully reconciled in the tables attached to the text of the earnings press release that we issued earlier today. We believe that these tables provide investors useful information about our business trends. However, our non-GAAP measures do not replace and are not superior to GAAP measures.

For the call today, Duncan Niederauer, Chief Executive Officer, will review the highlights for the quarter, walk you through our 2010 accomplishments, provide you with thoughts on the external outlook for 2011, update you on key initiatives, including NYPC, and conclude with our priorities for 2011.

Michael Geltzeiler, Chief Financial Officer, will then review the financial results for the quarter. We will then open the line for your questions. Also on the call today for the Q&A session is Larry Leibowitz, Chief Operating Officer.

When we go to the Q&A session, please limit your questions to one to allow for broader participation. We are incorporating slides for the call today, which are available for viewing on our website, and Duncan and Mike will refer to these slides during their remarks.

With that, let me turn the call over to Duncan.

Duncan Niederauer

Thank you, Stephen, and good morning, everybody. As we often do, we are going to walk you through the slide deck that's available online, so Mike and I will make a point of referencing which slide we're on as we go through the deck. So again, good morning to everybody, and thanks for joining the call today. I'm going to start on Slide 3.

Despite a challenging second half of the year in terms of trading volumes, we are very pleased with the progress we have made in 2010 in transforming our business model, and we enter 2011 with increasing momentum. Our Technologies business is already benefiting from the launch of our new data centers. We have significant optionality with the launch of NYPC and U.S. futures. Our clearing initiative in Europe is progressing, and the pipeline is building in our Listings business.

And the fact that none of these drivers are volume-dependent gives us even more confidence. Why? Because we see the health of corporate balance sheets, we see the return of corporate profitability, we see the global economy growing and therefore, believe it's likely that volumes will increase when compared to the second half of 2010.

As many of you know, we released our monthly volumes for January late last week, and we were encouraged by the sequential rebound in our derivative numbers and both the year-over-year and sequential growth in our European cash and U.S. options volumes. So while it's far too early to call it a trend if volumes do come back to more normal growth levels, we expect to reap the returns of our diversification efforts, as well as benefit from improving volumes. With that as an introduction, let me now turn to the quarter.

For the quarter, we recorded EPS of $0.46 per share on net revenue of $613 million, down from $0.58 on $640 million in net revenue in the prior year period. The strengthening of the dollar year-over-year reduced our net revenue by $19 million and EPS by $0.03, and the prior year period included a $0.06 positive impact from a special LCH.Clearnet dividend and the sale of stakes in NYSE Liffe U.S.

Our Technology business continued to show growth and benefited from the addition of revenue from our data centers coming online, strong enterprise software sales and the impact of NYFIX. Based on our expectations for data center-related revenue, revenue from several large exchange focus managed services agreements already signed and ancillary market data sales, we expect our Technology segment to generate an increase in revenue north of 15% in 2011.

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