Nasdaq declares dividend as low volumes sap profit

Wed Apr 25, 2012 5:41pm EDT
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By John McCrank

(Reuters) - Nasdaq OMX Group Inc (NDAQ.O: Quote) declared its first quarterly dividend on Wednesday, but said first-quarter net earnings declined 18 percent mainly due to lower trading volumes for stocks and derivatives.

The exchange operator said it plans to implement cost reductions, including job cuts, as it adjusts to the low volume environment.

Nasdaq said it would pay a quarterly dividend of 13 cents a share, a 2 percent yield, reflecting its strong cash flow and capital generation. It also said it would continue to repurchase shares.

"It is a material dividend, but it is relatively conservative," said Ed Ditmire, an analyst at Macquarie. "It's the lowest pay out ratio of any dividend-paying exchange, so that means they'll have plenty of room to raise it in years to come."

The Nasdaq Stock Market parent said it earned $85 million, or 48 cents a share, in the first quarter, down from $104 million, or 57 cents a share, a year earlier.

Stripping out an impairment charge and expenses for restructuring and strategic initiatives, Nasdaq said it earned 61 cents a share, on par with a year earlier.

Analysts on average expected the New York-based company to earn 63 cents a share, excluding items, according to Thomson Reuters I/B/E/S.

Revenue fell to $411 million from $413 million. Analysts expected $418.6 million.   Continued...

A pedestrian walks past the NASDAQ building in New York City, April 30, 2010. REUTERS/Lucas Jackson