* Q4 EPS, minus items, 43 cents; consensus view 38 cents
* NYSE to cut stakes in LCH.Clearnet, MCX
* NYSE CEO cautiously optimistic retail investors returning
By John McCrank and Luke Jeffs
NEW YORK, LONDON Feb 5 NYSE Euronext's
focus on cutting costs amid a lackluster trading environment
helped it beat profit expectations for the fourth quarter, and
the exchange operator pledged to further reduce expenses as it
prepares for its proposed sale to IntercontinentalExchange
The Big Board parent said on Tuesday its net income for the
quarter was $28 million, or 12 cents a diluted share, compared
with $110 million, or 43 cents a share a year earlier.
Stripping out one-time items, such as costs related to the
exchange operator's $8.2 billion takeover by ICE, the write-off
of clearing investments and debt refinancing, net income was 43
cents a share. That was 5 cents above analysts' expectations,
according to Thomson Reuters I/B/E/S.
Shares of NYSE were up 0.4 percent at $35.02 in New York in
late morning trade.
The profit beat was mainly due to lower-than expected
operating costs, which were down 6 percent at $392 million,
Macquarie analyst Ed Ditmire said in a note to clients.
With trading volumes declining for three straight years, and
nearly two-thirds of NYSE's total revenues linked to transaction
and clearings fees, NYSE last year turned its attention to cost
reductions, aiming to eliminate $250 million from expenses by
2014. In 2012, it cut $115 million in costs.
Looking forward, NYSE said it will shed its 5 percent stake
in Mumbai-based commodities market MCX, which it said is valued
in the mid-$60 million range. It also plans to unload as much of
its stake in clearing house LCH.Clearnet, in which it had a 9.1
percent stake as of Dec. 31, as possible.
NYSE is also unwinding its BlueNext carbon-trading exchange,
which was built in partnership with France's Caisse des Depots
Duncan Niederauer, NYSE's chief executive, was cautiously
optimistic about the prospect for trading volumes in 2013,
saying on a call with analysts that in January investors moved
back into U.S. equity mutual funds at rates not seen in quite
some time, as macro-economic concerns eased.
"While one month doesn't make a trend, we are hopeful that
this is an indicator of the reemergence of the retail investor,
and a resurgence of interest in the U.S. equity markets," he
The takeover of NYSE by ICE is expected to close in the
second half of the year, creating a powerful transatlantic
derivatives exchange and clearing house group.
NYSE, which operates European futures exchange Liffe, and
ICE, which runs an energy market and aims to expand into
interest rate futures, plan to hold their respective shareholder
meetings in the early spring to vote on the deal, Niederauer
NYSE's net revenue for the fourth quarter fell 11 percent to
$562 million as equities and derivatives trading volumes fell to
multi-year lows. Revenue was still above analysts' expectations
of $555.3 million.
Alex Kramm, an analyst at UBS, said that while NYSE's
transaction-related businesses were in line with his forecasts,
software and technology revenues were stronger than expected.
Cash trading and listing revenue was down 10 percent at $282
million. Data and systems revenue fell 6 percent to $120 million
and futures trading was off 14 percent at $160 million.