Nasdaq, CME Third-Quarter Profits Increase on M&A

U.S. bourse operators, Nasdaq Stock Market and CME Group both reported higher third-quarter profits on Wednesday.

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[NDAQ  Loading...      ()   ] , the second-largest U.S. equities exchange, said Wednesday that quarterly profit rose 12-fold, helped by a gain from the sale of its stake in the London Stock Exchange.

Nasdaq, which last month struck a complicated three-way deal with Borse Dubai to jointly buy Nordic markets operator OMX, also raised its full year income and revenue forecasts to reflect the sale of its 30 percent LSE stake.

Nasdaq had twice bid unsuccessfully for the LSE.

Net income for the third quarter rose to $365 million, or $2.41 per share, from $30.2 million, or 22 cents per share, a year earlier.

Excluding special items, Nasdaq earned $62 million, or 42 cents per share, beating analysts' average estimate of 39 cents, according to Reuters Estimates.

Fox-Pitt, Kelton analyst Edward Ditmire said Nasdaq's results were strong as it "put the LSE attempt behind it profitably, continued to gain U.S. equity share, and turned a rival into an ally in Borse Dubai."

Market Shares Drives Revenue

Total revenue rose nearly 62 percent to $652 million.

Net exchange revenue, which excludes rebates and various fees, rose about 23 percent to $210 million from $171.2 million.

Nasdaq Chief Executive Bob Greifeld said in a statement the results were built "largely on the success of new highs in trading volume and market share."

Nasdaq's matched market share -- which refers to trades executed within its own markets instead of being routed to other venues -- in stocks listed on its market fell to 47.3 percent from 48.7 percent in the year-ago quarter.

Nasdaq's matched market share in securities listed on NYSE Euronext's New York Stock Exchange rose to 18 percent during the third quarter from 12 percent the prior year.

The exchange said it took market share from NYSE-listed and American Stock Exchange-listed securities, which drove revenue growth during the quarter.

Nasdaq expects 2007 net income between $501 million and $507 million, up from a previously issued guidance of $171 million to $181 million.

The company expects full-year net exchange revenue of $800 million to $810 million, up from previous guidance of $775 million to $790 million.

These estimates and third-quarter results include a $431.4 million pre-tax gain from the sale of its LSE stake and other items, the company said in a statement.

The latest quarter's results also include a pre-tax gain of $35.2 million related to gains in Nasdaq's foreign currency option contracts.

Nasdaq also spent $1.1 million in work-force reduction and took other charges during the quarter.