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Nasdaq Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 3, 2012 01:24PM
Nasdaq (NDAQ) filed Quarterly Report for the period ended 2012-06-30. Nasdaq Omx Group, Inc. has a market cap of $3.95 billion; its shares were traded at around $23.31 with a P/E ratio of 9.2 and P/S ratio of 1.4. The dividend yield of Nasdaq Omx Group, Inc. stocks is 2.2%. Nasdaq Omx Group, Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Nasdaq Omx Group, Inc. the business predictability rank of 2-star.
Highlight of Business Operations:We have a profit-sharing contribution feature to our 401(k) Plan which allows eligible U.S. employees to receive employer retirement contributions, or ERCs, if we meet annual corporate goals. In addition, we have a supplemental ERC for select highly compensated employees whose ERCs are limited by the annual Internal Revenue Service compensation limit. ERC expense recorded in compensation and benefits expense in the Condensed Consolidated Statements of Income was $1 million for both the three months ended June 30, 2012 and 2011, $1 million for the six months ended June 30, 2012, and $2 million for the six months ended June 30, 2011.
The 2.50% convertible senior notes are accounted for under the treasury stock method as it is our intent and policy to settle the principal amount of the notes in cash. Based on the settlement structure of the 2.50% convertible senior notes, which permits the principal amount to be settled in cash and the conversion premium to be settled in shares of our common stock or cash, we will reflect the impact of the convertible spread portion of the convertible notes in the diluted calculation using the treasury stock method. For the three and six months ended June 30, 2012 and 2011, the conversion spread of our 2.50% convertible senior notes was out of the money, and as such, they were properly excluded from the computation of diluted earnings per share.
Revenues less transaction rebates, brokerage, clearance and exchange fees increased $8 million, or 1.0%, to $835 million in the first six months of 2012, compared with $827 million in the same period in 2011, reflecting an operational increase in revenues of $28 million and an unfavorable impact from foreign exchange of $20 million. The increase in operational revenues was primarily due to an:
Of our total first six months of 2012 revenues less transaction rebates, brokerage, clearance and exchange fees of $835 million, 67.7% was from our Market Services segment, 21.7% was from our Issuer Services segment and 10.6% was from our Market Technology segment. Of our total first six months of 2011 revenues less transaction rebates, brokerage, clearance and exchange fees of $827 million, 67.5% was from our Market Services segment, 21.8% was from our Issuer Services segment and 10.7% was from our Market Technology segment.
We record Section 31 fees as U.S. cash equity trading revenues with a corresponding amount recorded as cost of revenues. We are assessed these fees from the SEC and pass them through to our customers in the form of incremental fees. Pass-through fees can increase or decrease due to rate changes by the SEC, the percentage of overall industry trading volumes processed on our systems, and differences in actual dollar value of shares traded. Since the amount recorded in revenues is equal to the amount recorded in cost of revenues, there is no impact on our revenues less transaction rebates, brokerage, clearance and exchange fees. Section 31 fees were $84 million in the second quarter of 2012 and $146 million in the first six months of 2012 compared with $74 million in the second quarter of 2011 and $139 million in the first six months of 2011. The increase was primarily due to higher rates partially offset by lower dollar value traded on the NASDAQ and NASDAQ OMX BX trading systems.
Stocks Discussed: NDAQ,