Shaky Start to 2012 Hits NYSE Euronext

Bourse group's profits down amid failed merger and weak market conditions.

NYSE Euronext has announced that its profits have fallen by almost one third in the first quarter of 2012, although its technology division continues to perform.

Weak trading and the aborted merger with Deutsche Börse, blocked earlier this year by the European Commission, were blamed for the loss. NYSE estimates that the merger exit alone cost $16 million from a total of $31 million attributed to other mergers and exits, such as its part-stake purchase of Fixnetix.

Its derivatives operation was by far the hardest hit, with a contraction of 25 percent in revenue relative to the first quarter of 2011.

Its information technology division, however, grew by four percent in the first quarter. NYSE says that it expects this to continue, given that Q1 is traditionally a quiet period. It also blamed struggling clients postponing software and connection purchases for the lack of further growth, although it singled out its datacenter operations in Mahwah, New Jersey for praise.

"Our first quarter results reflect the challenging operating environment which carried over into 2012 and will continue to result in near-term headwinds," says Duncan Niederauer, CEO at NYSE Euronext. "Looking ahead into 2013 and 2014, we are focused on creating value by enhancing the underlying earnings power of the Company and solidly executing on the three core pillars of our earnings growth strategy outlined at our investor day: capturing growth opportunities in new markets and leveraging inter-asset class opportunities; delivering efficiencies through disciplined cost management and optimizing our shared services infrastructure; and strategically deploying our capital."

NYSE Euronext has made a string of announcements lately as it outlines its strategy as a single entity. It is planning a push into clearing in Europe, and terminating its involvement with LCH.Clearnet, following the company's acquisition by rival bourse the London Stock Exchange. Peter Leukert has joined the company as CIO following Steve Rubinow's departure, and it also has an option to purchase the remaining equity in Fixnetix over the next few years.