Since Duncan Niederauer took over NYSE Euronext 14 months ago, he has stopped market share losses, devised a plan to generate additional revenue from derivatives trading and made $160 million by selling technology. And the exchange's shares have dropped 78 percent, Bloomberg reported.
"The company is showing signs of operational improvements, but the question is, what's in it for shareholders?" said Ed Ditmire, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, who has an "outperform" rating on the stock. "This is a story for patient investors."
The 49-year-old chief executive officer will update investors today on his plan to generate at least $280 million in additional revenue while cutting $250 million in expenses. New York-based NYSE Euronext lost a record $1.34 billion in the fourth quarter after writing down part of its April 2007 purchase of Euronext NV.
Investors remain skeptical of the benefits of the $14 billion deal, which created the first Trans-Atlantic stock exchange and was the biggest in a $62 billion wave of consolidation among bourses that started in 2006.
"The deal made sense strategically, but they needed to be a lot more ambitious about cutting costs early in the process," Patrick O'Shaughnessy, a Chicago-based analyst with Raymond James Financial Inc., said in an interview. "It'll probably be 2010 before they get all the value they can from the merger, and that's a pretty extended timeframe in a very competitive industry."