Moody's Tumbles as Revenue Misses

Moody's MCO said its first-quarter revenue rose 13% from a year ago, but missed analysts' estimates.

The company, which owns ratings agency Moody's Investors Service, had a top line of $440.2 million for the quarter ended March 31, up from $390.5 million for the same period last year.

Moody's earned $146.2 million, or 49 cents a share, compared with $118.7 million and 39 cents a share a year ago. Analysts surveyed by Thomson Financial were looking for earnings of 49 cents and revenue of $451.8 million.

Shares of Moody's were sharply lower on the news, dropping $8.42, or 12%, to $62.01.

"Moody's reported solid results for the first quarter of 2006 against a backdrop of rising interest rates," the company said. "As expected, revenue declined or grew slowly in several units of our business that are sensitive to lower securities issuance volumes. This was offset by good growth in other units where issuance was strong or that are less volume sensitive, including annual fees from issuers and subscription fees for research and related products."

The company believes it can generate results for the remainder of the year that are in line with its outlook at the beginning of 2006. Moody's is forecasting revenue growth in the high single-digit to double-digit percent range for the year.

Earnings, before items, should show year-over-year growth in the low double-digit percent range, the company said. Expensing stock-based compensation will probably cost 13 cents to 15 cents a share this year.