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GFI Group Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of capital markets specialist GFI Group (Nasdaq: GFIG  ) were feeling the pinch today, falling as much as 12% in intraday trading after the company announced fourth-quarter results.

So what: There wasn't a whole heck of a lot for investors to get excited about in GFI's fourth quarter. Total revenue was up roughly 5% for the quarter, but the bottom line slipped into the red, delivering a $0.19-per-share loss on a GAAP basis and a $0.06 loss on an adjusted basis. That might have been better digested by investors if analysts had been projecting a loss for the quarter, but they had actually been looking for a per-share profit of $0.06.

Now what: It clearly wasn't a strong fourth quarter for GFI, and management blamed that on a variety of factors, including higher debt costs, investments in people and technology, and lower trading activity. Will 2012 bring better news for investors? The company seems cautiously optimistic: It highlighted cost-saving measures that it's taken as well as the strong growth in its analytics and data segments. It also pointed out that through mid-February, revenue is up 5% to 6% versus last year.

Thanks to technological advancements and the fallout from the financial meltdown, capital markets businesses like GFI have been under pressure and the company's fourth-quarter results reflect this. I don't know that there's a quick fix in the offing for the business, but it's notable that the company has historically been a good cash-flow generator and directs some of that cash to shareholders through a 4.4% dividend. While that alone doesn't make this a good investment, it could be a good reason for yield-seekers to take a closer look.

Want to keep up to date on GFI Group? Add it to your Watchlist.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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