The Wall Street Journal-20080201-Nasdaq- ICE Post Strong Profit Gains
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Nasdaq, ICE Post Strong Profit Gains
Full Text (474 words)A WSJ News Roundup
Nasdaq Stock Market Inc. posted a 25% rise in fourth-quarter net income, thanks in part to a jump in trading revenue. The electronic exchange also said it now accounts for a third of all U.S. stock- market activity.
Separately, IntercontinentalExchange Inc., a commodities exchange that focuses on energy products, reported a 32% jump in its fourth- quarter profit as volume rose amid record oil prices, and revenue came on line from ICE's five acquisitions in 2007.
Nasdaq Chief Executive Robert Greifeld said his company's market share in U.S. equities totaled 29.7% for the latest quarter and has risen to more than 31% at the start of the first quarter of 2008.
Nasdaq said latest results included pretax gains of $18.2 million on foreign currency options used to hedge the company's purchase of Nordic exchange and trading-technology firm OMX AB.
During a conference call, Nasdaq Chief Financial Officer David Warren said he expects the company to realize $20 million to $30 million in cost savings from the OMX deal in 2008, with $100 million in total savings from the acquisition. He said he expects the purchase of the Philadelphia exchange to yield annual cost synergies of $50 million within two years of closing. He sees the Boston transaction generating $14 million in reduced clearing expenses.
Following a six-week wrangling period this past summer between Borse Dubai and Nasdaq, the two companies agreed to a deal that will transfer OMX ownership to Nasdaq and link trading centers in the U.S., Europe and the Middle East. The deal will give Borse Dubai a 19.9% stake in Nasdaq.
OMX yesterday reported an 8.6% rise in fourth-quarter revenue to 1.11 billion Swedish kronor ($174.5 million). However, net income fell 32% to 200 million kronor as costs rose and the year-earlier result was boosted by a capital gain of 83 million kronor.
At Atlanta-based IntercontinentalExchange, revenue increases were driven by the addition of its U.S. operations and the implementation of electronic trading. Average daily volume increased 25% in Europe and Canada and 26% in the U.S.
In a conference call, ICE Chief Executive Jeffrey Sprecher poured cold water on speculation ICE could come in with a competing bid to derail CME Group Inc.'s attempt to buy energy exchange Nymex Holdings Inc. Mr. Sprecher noted that Nymex has been actively searching for a buyer for months and that ICE has had opportunities to bid for the company, as has anyone else, for quite some time.
The company reported net income of $64.7 million, or 90 cents a share, compared with $49 million, or 81 cents a share, a year earlier. Revenue soared 67% to $159.3 million.
As part of an attempt to move energy options trading to computer screens, ICE yesterday said it agreed to acquire YellowJacket Software Inc., a closely held financial-technology company. Terms weren't disclosed.
