Nasdaq OMX Group Inc., the second-largest U.S. stock exchange operator, said third-quarter profit rose 27 percent as technology and information services sales advanced. The shares headed for the biggest rally in 15 months.
Net income climbed to $113 million from $89 million in the third quarter a year ago as net revenue advanced 23 percent to a record $506 million, the New York-based company said in a statement today. Earnings excluding some items increased to 66 cents a share in the three months ended Sept. 30 from 62 cents in the year-earlier period. That compares with the 62-cent average estimate of 15 analysts compiled by Bloomberg.
Chief Executive Officer Robert Greifeld is diversifying the business to offset a decline in stock trading. The exchange has bought the eSpeed platform for dealing in U.S. Treasury bonds, the shareholder-relations unit of Thomson Reuters Corp. and a 25 percent stake in The Order Machine, a Dutch alternative trading system focused on options. Greifeld said Nasdaq OMX would evaluate a purchase of NYSE Euronext’s European equities business should it become available for sale.
“We would be remiss if the asset were to become available to not take a look at it,” Greifeld said today during a conference call. “The reason we have to look at it is we clearly have a European presence today. We are spending zero time thinking about it right now.”
IntercontinentalExchange Inc. agreed to buy NYSE Euronext in December, forming one of the world’s largest exchange owners by the market value of its stock. ICE, a specialist in energy trading, will expand through the deal into interest-rate swaps and U.S. stocks. ICE expects to complete it on Nov. 4, pending regulatory approvals, ICE CEO Jeffrey Sprecher said Oct 21.
Sprecher said he plans to dispose of Euronext through an initial public offering. It owns the Paris, Brussels, Lisbon and Amsterdam stock exchanges.
“To the extent they want to do an IPO, we wish them well with it,” Greifeld said.
Shares of Nasdaq OMX climbed 4.2 percent to $35 at 12 p.m. New York time today, extending their 2013 advance to 40 percent. The Bloomberg World Exchanges Index of 27 bourse operators has added 22 percent.
Today’s earnings release is the first since Nasdaq OMX halted trading for thousands of U.S. stocks for three hours on Aug. 22 after a flood of data from NYSE Arca, a rival market, exposed a software flaw in Nasdaq OMX’s conduit for disseminating prices. That prompted U.S. Securities and Exchange Commission Chairman Mary Jo White on Sept. 12 to order market operators to collaborate on avoiding malfunctions.
Nasdaq OMX narrowed its full-year cost projection, saying core expenses will be in a range of $1.075 billion to $1.09 billion, compared with a previous forecast of $1.07 billion to $1.1 billion. Total expenses will be between $1.12 billion and $1.135 billion, down from the prior estimate of $1.12 billion to $1.16 billion, the company said.
The company’s new London-based derivatives business is unlikely to garner 10 percent of pan-European market share in its first year of operation, Greifeld said today. The NLX business, which started May 31 to compete with Europe’s two biggest futures exchanges, was seeking more than 10 percent of pan-European market share in its first year of operation.
“It’s highly unlikely we’ll make the 10 percent market share” in the first year, Greifeld said during an interview today. “It’s a very hard target. We need to get to 10 percent, that’s indisputable. And on the path to 10 percent we have to show progress. I don’t expect it be steady.”