Nasdaq Profit Drops On Acquisition Costs - Update

(RTTNews) - Stock exchange operator Nasdaq OMX Group Inc. (NDAQ), Wednesday posted a lower second-quarter profit that missed Wall Street estimates, hurt mostly by acquisition-related costs. Revenues for the quarter improved on growth in most segments, partly offset by weak U.S. equity trading volumes.

Shares of the company dropped three percent in morning trade, following the results.

The results come as Nasdaq strives to branch out into data and fixed income trading, and has lapped up some acquisitions, which led to related costs in the quarter.

Nasdaq closed its $1.23 billion acquisition of the eSpeed platform from BGC Partners Inc. (BGCP). eSpeed operates a fully executable central limit order book for electronic trading in benchmark U.S. Treasuries.

The company also completed its $390 million acquisition of the Investor Relations, Public Relations, and Multimedia businesses of Thomson Reuters Corp. ( TRI, TRI.TO), and gained a 25 percent stake in The Order Machine, a Dutch alternative trading system.

As a result, merger-related charges led to quarterly operating expenses escalate to $292 million from $252 million a year ago.

The New York-based company posted quarterly net income of $88 million or $0.52 per share, a decline from $93 million or $0.53 per share last year.

Excluding items, adjusted earnings for the quarter were $0.62 per share. On average, 13 analysts polled by Thomson Reuters expected earnings of $0.63 per share.

Net revenues for the quarter increased to $451 million from $427 million a year ago. Analysts estimated revenues of $441.43 million for the quarter.

Among segments, Technology Solutions revenue surged to $95 million from $67 million a year ago, while modest growth was seen at information services and Listing services revenue segments.

At its key Market Services division, revenue slid to $190 million from $199 million, with weakness in U.S. stock trading.

Nasdaq said the businesses acquired from Thomson Reuters and the eSpeed deal are to add between $145 million and $160 million to its 2013 expenses. Total expenses in 2013 are now expected to be between $1.12 billion and $1.16 billion.

The company's stock is trading at $32.81, down $1.03 or 3.04%, on a volume of 815 thousand shares.