Nasdaq earnings fall on charges related to Facebook IPO
Nasdaq OMX Group Inc reported a lower first-quarter profit on Wednesday as the transatlantic exchange operator set aside cash to reimburse firms harmed in Facebook Inc's botched market debut last May.
Net income attributable to Nasdaq totaled $42 million, or 25 cents a share, down from $84 million, or 48 cents a share, a year earlier.
Nasdaq said it set aside $62 million of expenses for its Facebook reimbursement plan. It set aside $10 million to possibly settle a probe by the U.S. Securities and Exchange Commission into the problems surrounding the initial public offering.
Stripping out one-time charges, Nasdaq earned 64 cents a share. That was 2 cents higher than analysts had expected, on average, according to Thomson Reuters I/B/E/S.
Net revenue grew 1 percent to $418 million, as analysts expected.
Retail market makers have estimated they lost a combined $500 million due to Facebook's IPO on May 18, when a systems failure at Nasdaq prevented timely order confirmations for many market participants. That left them trading in the dark in the midst of the leading online social network's market debut.
In March, the SEC approved Nasdaq's plan to reimburse firms that meet certain criteria up to a total of $62 million. However, Nasdaq disclosed that the SEC's Division of Enforcement was conducting an investigation relating to the systems issues.
Nasdaq has been diversifying away from transaction-based revenues over the past several years, putting more of a focus on business units that provide a steadier income flow through providing services like technology and data to other companies.
On April 1, Nasdaq said it would buy electronic Treasuries-trading platform eSpeed from BGC Partners Inc for $750 million in cash, providing the exchange operator an entry into one of the world's largest and most liquid cash markets.
The New York-based company said in March it planned to create a market for trading shares of unlisted companies in a joint venture with trading platform SharesPost Inc. And it announced in December it was buying Thomson Reuters Corp's investor relations, public relations and multimedia services units for $390 million.
Nasdaq said Wednesday its total operating expenses would be in the range of $972 million to $1 billion, up from guidance at the end of the previous quarter of $960 million to $990 million.
The expense guidance does not include expenses related to Nasdaq's cost reduction plan, expenses for the Facebook payback plan, the SEC investigation, special legal expenses, or expenses associated with the eSpeed and Thomson Reuters' unit deals. (Editing by Gerald E. McCormick and Bernadette Baum)