Tags: nasdaq | earnings | facebook | profit

Nasdaq Earnings Fall on Charges Related to Facebook IPO

Wednesday, 24 April 2013 07:35 AM

The Nasdaq OMX Group's profit fell by half in the first quarter, as the company set aside $62 million to reimburse investors who lost money due to technical glitches during Facebook's IPO last May.

The Securities and Exchange Commission is investigating what happened during Facebook's debut, and Nasdaq said Wednesday that it may have to pay $10 million to resolve the matter with regulators. The SEC hasn't yet decided what to do, Nasdaq said.

Facebook went public May 18 amid great fanfare, but computer glitches at the Nasdaq delayed the start of trading and threw the debut into chaos. Technical problems kept many investors from buying shares that morning, selling them later in the day or even from knowing whether their orders went through. Some said they were left holding shares they didn't want.

Nasdaq OMX Group Inc., which runs its namesake stock market along with a series of other platforms and clearinghouses in the U.S. and overseas, has had to deal with subdued trading volumes. It has cut costs to offset lower market activity. Exchange revenue fell 4 percent from a year ago to $182 million.

The company has made several acquisitions recently to help lessen its dependence on stock markets. It said this month it would buy eSpeed, an electronic service for trading U.S Treasury notes and bonds, for $1.23 billion, and in March made a deal to partner with private stock exchange SharesPost to develop a new market for unlisted companies. Last year, it reached a deal buy the corporate services division of Thomson Reuters Corp. for $390 million.

For the January-to-March period, the company said net income fell to $42 million, or 25 cents per share, from $85 million, or 48 cents per share, in the first quarter of 2012.

Stripping out the effect of the Facebook reimbursement fund, restructuring and acquisition charges and other one-time items, earnings ticked up to 64 cents per share. Analysts, on average, expected adjusted earnings of 62 cents per share, according to FactSet.

Revenue minus transaction rebates and brokerage and clearance fees rose 1 percent, to $418 million from $414 million. That was roughly in line with analysts' expectation of $416.2 million. While market revenue fell, revenue from information services and technology products rose. Listing services revenue was nearly unchanged.

Nasdaq stock was inactive in premarket trading Wednesday. Shares closed Tuesday at $28.47, up nearly 14 percent since the start of the year.

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Nasdaq OMX Group Inc. reported on Wednesday a lower first-quarter profit, as the transatlantic exchange operator set aside cash to reimburse firms harmed in Facebook Inc's botched market debut last May. Net income attributable to Nasdaq totaled $42 million, or 25 cents per...
Wednesday, 24 April 2013 07:35 AM
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