LaBranche sees profits below forecasts
biz.yahoo.com
NEW YORK, June 22 (Reuters) - LaBranche & Co. (NYSE:LAB - news), a New York Stock Exchange trading firm, on Friday said it expects second-quarter profits to fall short of expectations because of the continued stock market slump.
The company, which acts as a share dealer for more than 500 Big Board stocks, forecast earnings of 26 to 30 cents per share.
Analysts polled by Thomson Financial/First Call expect LaBranche to earn 29 to 40 cents per share, with a mean estimate of 33 cents.
The lagging stock market -- which has seen a 0.7 percent drop in the Dow Jones industrial average (^DJI - news) and a 16.7 percent drop in the Nasdaq (^IXIC - news) so far this year -- has hamstrung trading desks throughout Wall Street. Morgan Stanley (NYSE:MWD - news), a top U.S. investment bank, on Thursday said its second-quarter earnings dropped 36 percent as the weak stock market hurt share-trading revenues.
LaBranche's warning also comes one day after Knight Trading Group Inc. (NasdaqNM:NITE - news), the largest Nasdaq share dealer, said it was considering cutting its U.S. stocks staff by 6 percent. Knight, which is also looking at other cost-cutting measures, said it had been hurt by the shift to trading stocks in pennies in place of traditional fractions.
The U.S. Securities and Exchange Commission pushed for the shift to decimals in an effort to cut investors' costs by narrowing spreads, the difference between what a buyer and seller are asking for a stock.
Nasdaq share dealers, known as market makers, pocket the spread, and many have been looking for ways to boost revenues since the shift.
Unlike Nasdaq share dealers, LaBranche does not pocket the trading spread. Its share dealers, known as specialists on the floor of the NYSE, make money by trading for firm accounts.
Specialists, who manage the buying and selling of a stock, have an inside look at the order flow but are not immune to the whims of the market. Additionally, specialists are required to fill customer orders first and sometimes must trade against the prevailing market to ensure a stock price does not swing too dramatically.
LaBranche also forecast second-quarter cash earnings of 47 to 51 cents a share. |
