NYSE Euronext rejigs Qatar deal as profits fall
London, April 30, 2009
NYSE Euronext scaled back its planned investment in a Qatar exchange and unveiled more cost savings as the transatlantic exchange reported a slump in profits.
NYSE said net profit fell 55 percent to $104 million for the three months to the end of March, or $0.4 per share, just above an average of $0.39 per share from estimate tracker IBES.
"Since we reported record results in the first quarter of 2008, the financial services landscape has undergone a significant transformation," said Duncan Niederauer, chief executive of the group.
"I am confident that as market conditions stabilize we will be well positioned for growth," he added.
The group accelerated its cost savings initiatives during the reporting period and increased its cost savings guidance by $100 million, to be realised in 2009.
In the first quarter, it cut $51 million in fixed costs compared to the fourth quarter of 2008, $120 million of run-rate technology savings, and $120 million in savings related to its acquisition of Amex.
Intensified competition has hurt its market share, with its US equities share down to 31.2 percent in April, from 32 percent in March.
After announcing plans to restructure its deal with the Qatar state in early February, the group confirmed that it was in negotiation to limit its stake in the Qatar Securities Market to 20 percent from 25 percent.
Under the restructured agreement, which is expected to close in the next few months, NYSE Euronext would pay $200 million, down from $250 million, in instalments of $40 million over a period of four years in an attempt to reduce cash outflow.
The transatlantic bourse beat the London Stock Exchange in June 2008 to win the Qatar deal to extend global links by building a new integrated cash and derivatives exchange in Doha. - Reuters