* Q1 loss of 3 cents a share
* Minus one-time items, earns 6 cents a share, versus
expectations of 4 cents a share
* Headcount down to 1,269 full-time employees from 1,418 a
NEW YORK, May 1 Automated trading firm Knight
Capital Group posted a quarterly loss as a result of
restructuring costs following its Aug. 1 trading glitch, along
with expenses related to its subsequent $1.4 billion takeover by
Getco Holding Co.
A software problem at Knight in August led to millions of
unintentional orders flooding into the market over a 45-minute
period, leaving the firm with a huge position it had to unload
at a loss of $461.1 million.
Knight said on Wednesday it fell to a first quarter loss of
$9.4 million, or 3 cents a diluted share, compared with a profit
of $33.1 million, or 36 cents a share, a year earlier.
Stripping out one-time items it earned 6 cents a share from
continuing operations, topping analysts' average forecast by 2
cents, according to Thomson Reuters I/B/E/S.
Revenues fell 5.7 percent to $285.2 million.
Following the August glitch, Knight secured $400 million in
rescue financing - in exchange for a more than 70 percent stake
in the company - from a group of investors that included
Chicago-based Getco as well as St. Louis-based Stifel Financial
Corp. The deal was led by Jefferies Group, which later
helped finance Getco's proposed acquisition of Knight that is
expected to close in the first half of 2013.
The near-death encounter also led Knight to reorganize its
business. During the first quarter it sold its institutional
fixed income sales and trading business to Stifel, cut its
correspondent clearing unit, and combined its institutional
sales and trading, and electronic execution services units.
As a result of the restructuring, headcount at the firm was
down to 1,269 full-time employees as of March 31, compared to
1,418 a year earlier.
Knight said it had $8.9 million in compensation fees related
to the layoffs. It also said it had $9.3 million in professional
fees related to the Aug. 1 glitch and the Getco deal.
Knight, a top U.S. market making firm, made an average of
2.97 million trades a day in the quarter, down 10.8 percent from
a year earlier.
Consolidated U.S. equity volume declined 5.8 percent from a
year earlier to around 6.1 billion trades per day.
Knight's operations outside of market making include foreign
exchange and bond trading platforms, as well as a stake of
around 20 percent in No. 4 U.S. equities exchange Direct Edge.
Getco also has market making operations and is one of the
biggest high-frequency trading firms. Getco is also a big player
in the automated trading foreign exchange market and has been
building up its agency brokerage operation over the past few