NYSE Group Inc., the biggest stock exchange in the world is traded on NYSE under the symbol of NYX. In my opinion currently it is a BUY, but only for risk-takers.
NYSE Group operates two securities exchanges, the New York Stock Exchange (the "NYSE") and NYSE Arca. As of December 31, 2006, the NYSE and NYSE Arca listed approximately 2,764 world-class issuers. NYSE Group listed 206 new issuers in 2006, including 28 transfers from other markets (compared to 16 in 2005) and 29 non-US companies (compared to 19 in 2005).
On February 2, 2007, NYSE Group, Inc. announced its 2006 annual financial results. In the fourth quarter of 2006, NYSE Group reported profit after reporting a loss in the year ago quarter. It posted 55% increase in revenue in the fourth quarter of 2006 compared to the fourth quarter of 2005. Its earnings per share (excluding non-recurrent items) were 45 cents, just missing the analysts’ estimates by 01 cent. Though the NYSE Group saw tremendous growth in revenue and profit in 2006, its expenses were higher than expected due to increased marketing costs. The non-recurrent expenses mainly included merger costs and restructuring costs because of workforce reduction.
I personally like the Big Board led by John Thain, because it is all about growth and expansion. However, I will recommend it only to risk-takers. As part of its global growth strategy, NYSE Group is all set to merge with Euronext N.V., a pan-European, Paris-based stock exchange with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom. On January 10, 2007, NYSE Group announced an agreement to acquire a 5% equity position in the Mumbai-based National Stock Exchange of India Limited (NSE). On January 31, 2007, NYSE Group formed a strategic alliance with the Tokyo Stock Exchange hoping for a stronger tie-up in the future. Also, John Thain, the CEO of NYSE Group Inc., mentioned that a link up with a Chinese exchange is now on his mind.
In addition to its global growth, NYSE Group has a sound cost-cutting strategy in place. The company is cutting its workforce, replacing people with faster and cheaper machines and closing its trading floors. The exchange is in the process of implementing an electronic trading platform, the "Hybrid Market". On January 24, 2007 NYSE Group announced the completion of Hybrid Phase III and expects to conclude Hybrid phase IV by March 5, 2007. This move has resulted in improved efficiencies and reduced expenses allowing the Big Board to shut down some of its trading floors. NYSE Group's total employee headcount was 2578 as of December 31, 2006, compared to 3296 as of December 31, 2005 (a reduction of 718 positions).
I believe that investing in NYSE Group Inc. can make you very green, but it is risky for two reasons. Firstly, the NYSE Group is competing with NASDAQ Stock Market Inc. (NDAQ). NASDAQ has lower listing fees and this will put pressure on NYSE Group's pricing controls. Secondly, the NYSE Group is growing too fast and its failure to integrate its mergers and acquisitions smoothly can damage the stock. The NYSE Group has bright growth prospects, but its inability to increase its earnings per share in the future quarters can affect the stock price adversely.
Bottom line, NYSE Group's main objective is to make money and it is expanding at a high pace, but I think it is not for faint hearts. So, investors BUY NYX but do not make it a part of your risk-averse portfolio.
NYSE Group operates two securities exchanges, the New York Stock Exchange (the "NYSE") and NYSE Arca. As of December 31, 2006, the NYSE and NYSE Arca listed approximately 2,764 world-class issuers. NYSE Group listed 206 new issuers in 2006, including 28 transfers from other markets (compared to 16 in 2005) and 29 non-US companies (compared to 19 in 2005).
On February 2, 2007, NYSE Group, Inc. announced its 2006 annual financial results. In the fourth quarter of 2006, NYSE Group reported profit after reporting a loss in the year ago quarter. It posted 55% increase in revenue in the fourth quarter of 2006 compared to the fourth quarter of 2005. Its earnings per share (excluding non-recurrent items) were 45 cents, just missing the analysts’ estimates by 01 cent. Though the NYSE Group saw tremendous growth in revenue and profit in 2006, its expenses were higher than expected due to increased marketing costs. The non-recurrent expenses mainly included merger costs and restructuring costs because of workforce reduction.
I personally like the Big Board led by John Thain, because it is all about growth and expansion. However, I will recommend it only to risk-takers. As part of its global growth strategy, NYSE Group is all set to merge with Euronext N.V., a pan-European, Paris-based stock exchange with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom. On January 10, 2007, NYSE Group announced an agreement to acquire a 5% equity position in the Mumbai-based National Stock Exchange of India Limited (NSE). On January 31, 2007, NYSE Group formed a strategic alliance with the Tokyo Stock Exchange hoping for a stronger tie-up in the future. Also, John Thain, the CEO of NYSE Group Inc., mentioned that a link up with a Chinese exchange is now on his mind.
In addition to its global growth, NYSE Group has a sound cost-cutting strategy in place. The company is cutting its workforce, replacing people with faster and cheaper machines and closing its trading floors. The exchange is in the process of implementing an electronic trading platform, the "Hybrid Market". On January 24, 2007 NYSE Group announced the completion of Hybrid Phase III and expects to conclude Hybrid phase IV by March 5, 2007. This move has resulted in improved efficiencies and reduced expenses allowing the Big Board to shut down some of its trading floors. NYSE Group's total employee headcount was 2578 as of December 31, 2006, compared to 3296 as of December 31, 2005 (a reduction of 718 positions).
I believe that investing in NYSE Group Inc. can make you very green, but it is risky for two reasons. Firstly, the NYSE Group is competing with NASDAQ Stock Market Inc. (NDAQ). NASDAQ has lower listing fees and this will put pressure on NYSE Group's pricing controls. Secondly, the NYSE Group is growing too fast and its failure to integrate its mergers and acquisitions smoothly can damage the stock. The NYSE Group has bright growth prospects, but its inability to increase its earnings per share in the future quarters can affect the stock price adversely.
Bottom line, NYSE Group's main objective is to make money and it is expanding at a high pace, but I think it is not for faint hearts. So, investors BUY NYX but do not make it a part of your risk-averse portfolio.
3 comments:
Devyani --
My compliments on your blog!
Thanks for taking note of the changes NYSE Group is making in our marketplace. If you or your readers want to see more about our Hybrid Market, please check out the blog I run at http://hybridtalk.nyse.com
Happy blogging and investing!
-- Ray Pellecchia, NYSE Group
What is a risk-averse portfolio ?
Nice blog, I am a regular reader and I hope to see something new more frequent.
Thank you !!!
Your 401(k)/IRA is risk-averse.
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