NYSE Beats on Cost Reduction

| About: NYSE Euronext (NYX)

NYSE Euronext, Inc.’s (NYSE:NYX) fourth quarter operating earnings per share of 58 cents came in decisively ahead of the Zacks Consensus Estimate of 48 cents. Earnings were also ahead of the 52 cents per share recorded in the year-ago quarter and 53 cents in the prior quarter.

Results reflect increasing momentum in the business model and the continuing benefit from the various cost reduction programs, including 14% year-over-year reduction in staff members. The company also benefited from the acquisition of NYFIX Marketplace and semi-mutualization of NYSE Liffe U.S. Accordingly, operating net income increased to $151 million compared to $137 million in the year-ago quarter.

NYSE reported GAAP net income of $172 million or 66 cents per share as compared to a net loss of $1.3 billion or $5.06 per share for the prior year quarter. These include the impact of merger expenses and exit costs and the requisite reversal of discrete tax reserves, for the reported quarter of 2009.

Excluding activity assessment fees, gross revenues declined 14% year-over-year and 3% from the prior quarter to $1.014 billion in the reported quarter of 2009. Net revenues (defined as gross revenues less direct transaction costs consisting of Section 31 fees, liquidity payments and routing and clearing fees) were $640 million, down 6% from $683 million in the prior-year quarter but up 3% from $624 million in the prior quarter. Revenue from the global derivative markets was partially offset by decline in global cash markets.

Fixed operating expenses declined to $432 million from $473 million in the prior-year quarter, but were almost flat from $431 million in the prior quarter. The effective tax rate was 27%, down from 29% in the prior year, primarily due to the favorable mix of profits from NYSE’s global subsidiaries. At Dec 31, 2009, total headcount of NYSE was 3,321 (excluding 136 headcount from NYFIX) down 5% and 14% from Sep 30, 2009 and Dec 31, 2008, respectively.

For the full-year 2009, gross revenues of $4,299 million decreased 4% compared to full-year 2008. Gross revenues were negatively impacted by a decline in global cash equities volumes and pricing changes across the European and U.S. cash businesses.

Net revenues declined to $2.48 billion from $2.88 billion in 2008 and include a ($123) million negative impact attributable to foreign currency fluctuations. NYSE reported GAAP net income of $291 million or 84 cents per share, compared to a net loss of $738 million or $2.78 per share in 2008. However, operating earnings declined to $533 million from $763 million in 2008.

As of Dec 31, 2009, total debt declined $119 million from the prior quarter to $2.8 billion, and consists of $2.2 billion in long-term debt and $0.6 billion in short-term debt. At the end of 2009, cash and cash equivalents, investments and other securities were $0.5 billion and net debt was $2.3 billion.

Business Update

On November 30, 2009, NYSE completed the acquisition of NYFIX Marketplace. The acquisition is expected to significantly expand NYSE's pre-trade product offering and global buy-side and sell-side trading communities.

The NYFIX Marketplace is one of the broadest and deepest FIX-based communities in the industry, where more than 1,000 global trading counterparties connect to one another via more than 9,000 fully managed FIX-based messaging channels.