Trans-Atlantic stock exchange operator NYSE Euronext said Tuesday that it returned to profit in the fourth quarter as cost-cutting efforts helped offset a drop in revenue amid falling global share trading volumes.
The operator of the New York Stock Exchange and markets in Paris, Amsterdam and Brussels reported earnings of $172 million, or 58 cents per share, in the three months ended Dec. 31. That compares with a loss of $1.34 billion, or $5.06 per share, a year earlier when collapsing equity markets forced it to slash the value of the 2007 merger of NYSE and Euronext.
NYSE Euronext's $640 million in net revenue slipped 6 percent in the fourth quarter, but still beat expectations. Analysts had forecast a profit of 48 cents per share on net revenue of $638.3 million, according to a Thomson Reuters poll.
Shares of NYSE Euronext jumped $1.13, or 5 percent, to $23.63 in midday trading in New York on the report. NYSE Euronext was one of the biggest gainers in the exchange sector, which is mixed for the day even as broader markets rally.
The company blamed "a decline in global cash equities volumes" as well as price cuts at some of its European and U.S. operations for the drop in revenue.
To counter falling revenue, NYSE Euronext said it managed to cut its fixed operating expenses by 11 percent over the year. In October it completed its acquisition of the American Stock Exchange, a deal that it says will provide annualized savings of more than $100 million.
Over the past year, NYSE has seen its share of trades executed decline as competition has increased. NYSE's matched volume of NYSE-listed stocks fell to 36.6 percent in the fourth quarter, from 43 percent during the year-ago period.
Matched volume represents the share volume of NYSE-listed securities that are executed on an exchange's book as a percentage of total market volume. For the full year, matched volume fell 7 percent to 38.4 percent.
Rival trading platforms launched in recent years have eaten away at market share held by long-standing exchange operators like NYSE Euronext and its rival Nasdaq OMX. Cash equities, such as stocks, bonds and exchange-traded funds, have been hit the hardest by the competition. NYSE Euronext's U.S. cash products volume fell 37 percent during the fourth quarter, while European cash volume dropped 18 percent.
Eroding market share, weaker trading volumes and reduced trading fees also hurt Nasdaq OMX Group Inc.'s fourth-quarter revenue, but sharply lower taxes and fewer charges helped the rival global exchange operator report better-than-expected profit growth earlier this week.
For the full year, NYSE Euronext reported profit of $219 million, as revenue slipped just 0.3 percent to $4.69 billion.
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