Earnings Preview: Nasdaq OMX Group

Nasdaq OMX Group Inc. first-quarter earnings on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Nasdaq OMX Group is a stock exchange operator with operations throughout the world. On Feb. 27, Nasdaq Stock Market Inc. completed its acquisition of OMX AB, creating the new operations called Nasdaq OMX Group.

Nasdaq OMX Group is also in the process of completing other acquisitions, including purchasing the Philadelphia and Boston Stock Exchanges.

Stock exchange operators such as Nasdaq OMX Group derive much of the revenue and earnings from trading volume.

BY THE NUMBERS: Analysts polled by Thomson Financial, on average, forecast first-quarter earnings of 49 cents per share on revenue of $298.4 million.

ANALYST TAKE: Citi Investment Research analyst Donald Fandetti reduced his first-quarter earnings estimate 2 cents per share to 47 cents per share because of dilution from new stock issued to complete the acquisition of OMX Group.

Lehman Brothers analyst Roger Freeman said Nasdaq OMX Group revenue growth could be weighed down by expenses during the first quarter.

"On balance, we believe that our revenue assumptions are conservative, but that this could be more than offset by higher operating expenses than we had previously assumed," Freeman wrote in the note.

Freeman estimates OMX Group's revenue will only increase 2 percent in 2008 and that Nasdaq OMX Group will earn 49 cents per share during the first quarter.

WHAT'S AHEAD: Market trading could be slowing down from the pace set in the first quarter. U.S. equity market average daily volume in April was 6.8 billion shares, an 18 percent decline from the previous month, Freeman wrote in a separate research note. Nasdaq-listed volume fell 4.4 percent from the year-ago period, Freeman said.

Nasdaq OMX Group is also expected to close on its acquisitions of the Philadelphia Stock Exchange and Boston Stock Exchange in 2008. Integration costs associated with the acquisitions could make financial results "a bit messy," Fandetti said.

STOCK PERFORMANCE: Shares of Nasdaq OMX Group fell 22 percent in the first quarter.