UPDATE 3-NYSE Euronext shares dive as earnings disappoint
(Adds quotes from analysts, LSE, byline)
NEW YORK, Aug 1 (Reuters) - NYSE Euronext (NYX.N) reported a lower-than-expected quarterly profit on Friday, hurt by rising acquisition-related expenses, and the New York Stock Exchange operator's shares fell more than 14 percent.
Some analysts said they were disappointed by the expenses from a flurry this year of smaller-scale purchases intended to stem a loss of market share, which continued into the latest quarter.
NYSE Euronext stood by its long-term estimate of $275 million in savings from last year's transatlantic NYSE-Euronext merger.
"We're all very confident that our so-called core expense space is absolutely going down," Chief Executive Duncan Niederauer said on a conference call.
But the company's fixed operating expenses jumped from both the previous quarter and from the comparable quarter of 2007, worrying some observers that expected growth synergies may not come about.
"Even though they sound optimistic, unless you see the numbers sequentially going down, are we actually seeing these cost cuts happen?" said Patrick O'Shaughnessy, an analyst at Raymond James and Associates.
Second-quarter earnings rose to $195 million, or 73 cents a share, from $161 million, or 62 cents a share, a year earlier.
Excluding special items -- including an accrual following the close of litigation involving former CEO Richard Grasso -- profit was 75 cents a share. That missed the analysts' average forecast of 78 cents, according to Reuters Estimates.
Revenue rose 7 percent to $1.15 billion, which beat analyst estimates of $1.1 billion.
Niederauer said on the call the company was "well on our way to delivering" the $250 million in technology-related savings and another $25 million in other merger benefits, by the end of 2010.
But smaller investments in technology and other exchanges -- such as Wombat Financial Software, Euronext Advanced Trading Solutions and the American Stock Exchange this year alone -- complicated the outlook for NYSE Euronext's balance sheet.
The company said the closing of one of those acquisitions, Amex, is now set for September instead of August, as previously announced.
"There are a ton of moving parts, so it's just really hard to track their progress," said O'Shaughnessy.
SHARES AT TWO-WEEK LOW Continued...
