NYSE Earnings Drop, Hurt By Merger Expenses

NYSE Euronext said its net income dropped $30 million, or 16 percent, in the second quarter.

The operator of the New York Stock Exchange reported net income of $154 million, or $0.59 per diluted share, for the second quarter of 2011, compared to net income of $184 million, or $0.70 per diluted share, for the second quarter of 2010.

Results for the second quarter of this year included $18 million in merger expenses and exit costs. This included $12 million related to the proposed merger with Deutsche Boerse, announced in February.

Last week, rival Nasdaq OMX Group said its earnings dropped in the second quarter, hurt as well by its attempt to merge with NYSE Euronext. Its net income in the second quarter was down $4 million from the prior year and the capital markets operator said the results were hurt by $29 million of expenses associated with merger and strategic initiatives, in the quarter. That’s the period when it staged an unsuccessful and hostile bid to take over NYSE Euronext.

While its second quarter results this year were afflicted with $18 million in merger expenses and exit costs, that is actually $14 million to the good compared to the same quarter a year ago. In the second quarter of 2010, the company said it incurred $32 million of pre-tax merger expenses and exit costs.

Excluding merger expenses, exit costs, disposal activities and discrete tax items, net income in the second quarter of 2011 was $160 million, or $0.61 per diluted share, compared to $167 million, or $0.64 per diluted share, in the second quarter of 2010.

"Our solid results in the second quarter reflect our focus on revenue diversification, disciplined cost management and balance sheet strength as we continue to execute against our long-term strategy in an extremely challenging environment," said Duncan L. Niederauer, CEO, NYSE Euronext.

Niederauer cited the launch of Eurodollar and U.S. treasury futures at its NYSE Liffe operation and a successful wave of initial public offerings in the quarter, as signs of strength.

The company also saw its technology services business grow 14 percent, year over year.

NYSE Euronext said revenue for its Information Services and Technology Solutions business was $122 million in the second quarter of 2011, an increase of $15 million, or 14% compared to the second quarter of 2010.

This included “a $5 million positive impact from currency fluctuations. “ The remainder was driven by “an increase in infrastructure revenue, principally [Secure Financial Transaction Infrastructure] and data center fees.”

During the period, its NYSE Technologies arm launched a financial services cloud service called the Capital Markets Community Platform. The initiative was launched with virtualization software pioneer VMware and storage giant EMC.