--Net profit declines to $125 million
--CEO says economic uncertainty weighing on trading, technology
spending
--Early progress seen on cost-cutting effort
(Updates with additional detail on results, comments from
conference call.)
By Jacob Bunge and Inti Landauro
Exchange operator NYSE Euronext (NYX) said Friday its
second-quarter net income fell to $125 million from $154 million a
year earlier due to lower trading volumes, mainly in
derivatives.
The Big Board parent reported early progress on efforts to trim
costs, cutting operating expenses by $35 million as part of a
broader response to slower markets that have hit revenue derived
from trading fees.
"To a person, everyone is talking about tremendous and
continuing uncertainty in the underlying foundation" of the global
economy, said Duncan Niederauer, chief executive of NYSE Euronext,
speaking to analysts on a conference call Friday.
That uncertain environment, which Mr. Niederauer said has
dampened trading and technology spending, is likely to persist
through next year.
Net revenue in the period fell 9% to $602 million because of the
lower trading volumes, and losses from foreign-exchange
fluctuations, as NYSE Euronext collects some fees in euros and
pounds sterling. Diluted earnings a share dropped to $0.51 from
$0.61.
Revenue from NYSE Euronext's futures and options markets dipped
13% versus the prior-year period, with its London-based
interest-rate derivatives pressured by central banks' continued
efforts to hold down benchmark interest rates.
The net profit included charges of $12 million for pretax merger
expenses and $18 million for exit costs.
Shares recently were $24.68, up 0.4% in premarket trading.
Following its failed tie-up with Deutsche Boerse AG (DB1.XE),
NYSE Euronext last spring launched a revamped two-year standalone
plan aimed at raising profit and cutting $250 million in costs by
2014. The plan seeks to trim headcount -- in May two senior
executives departed the company -- as well as exit underperforming
investments and joint ventures.
Mr. Niederauer said NYSE Euronext had agreed to trim its
investment in the Qatar Exchange to 12% from a previous 20%, while
the company builds its own clearinghouse in the United Kingdom to
reduce its reliance on trade-processing firm LCH.Clearnet.
NYSE Euronext said it bought back 11 million shares for a total
$304 million, part of ongoing capital return efforts that other
exchanges have also embraced in lieu of blockbuster mergers.
Write to Jacob Bunge at jacob.bunge@dowjones.com and Inti
Landauro at inti.landauro@dowjones.com
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