Nasdaq Market’s Earnings Rise 61%

Cost cutting helped the Nasdaq Stock Market boost third-quarter earnings 61% despite the plunge in share prices in the period, the No. 2 U.S. equity market said Monday.

Nasdaq said third-quarter net income was $12.7 million, or 13 cents a share, compared with $7.9 million, or 7 cents, a year earlier. Revenue edged up to $199.1 million from $197.7 million, while expenses fell to $173.6 million from $191 million.

Nasdaq is in the process of being spun off from its parent, NASD, and hopes to make a public stock offering in 2003. A limited number of shares now trade in the Bulletin Board market. Those shares slipped 20 cents to $7 before the earnings were reported Monday.

Chief Financial Officer David Warren said Nasdaq continued to pare expenses. He said the market was in the process of reducing its staff by 7% to 10% and expected to have about 1,250 employees by year-end.

The long bear market is taking a toll on Nasdaq as the number of firms it lists continues to decline, traders pull back and competitors grab market share.

Although average daily share volume in Nasdaq stocks rose 5.3% in the quarter from a year earlier -- boosted by the record trading activity in mid-summer, as prices tumbled -- Nasdaq said its share of trades executed in its systems fell to 28.6% in the quarter from 39.3% a year earlier.

That reflects the rise of so-called electronic communications networks that trade Nasdaq stocks. To fend off that competition, Nasdaq this month rolled out SuperMontage, an upgraded trading system.

Nasdaq said its market information services revenue, or fees charged for access to stock quotes and other trading data, slid 15.6% to $49.1 million in the quarter from a year earlier. But revenue from annual and initial stock listing fees rose 12.2% to $44.2 million, as Nasdaq continued to benefit from a fee increase implemented this year.