Knight Capital Revenue Doubles

It wipes out earnings estimates.
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Knight Capital

(NITE)

, the big Nasdaq trading firm, reported a robust first-quarter profit, as revenue doubled from a year ago.

Earnings and revenue at the Jersey City, N.J.-based firm blew past Wall Street expectations. Shares of Knight Capital were poised to open 16% higher, based on premarket trading.

In the quarter, Knight earned $49 million, or 47 cents a share, up from $5.8 million, or 5 cents a share, a year earlier. Revenue doubled to $276 million.

On an operating basis, Knight earned 52 cents a share. The operating profit excluded a nickel charge stemming from the cost of carrying excess real estate at its New Jersey headquarters.

Analysts, as surveyed by Thomson Financial, were looking for Knight to earn 30 cents a share, on an operating basis. Analysts were only looking for revenue of $194 million.

While revenue soared, Knight managed to keep its transaction-related expenses under control. Those expenses rose 21% to $56 million.

The first quarter results were a remarkable turnaround for a firm that had seen it fortunes collapse during the recession and a series of trading-related scandals. Back in 2001, the stock was trading around $60. On Tuesday, it closed at $14.38.

The firm credited the turnaround to a combination of the strong stock market environment and improved technology for executing customer trades. Knight is one of the largest market makers, or trade execution firms, on the Nasdaq Stock Market.

"Knight has delivered on our promises of a year ago,'' said Chairman and CEO Thomas Joyce. "We introduced significant improvements to the broker-dealer business and grew the institutional business.''

On the revenue front, the firm was led by big gains in fees from its asset management group and in trading revenue. Asset management fees rose 296% to $70.5 million. Trading revenues surged from 116 to $80 million.

In premarket trading, shares of Knight were up $2.37, or 16%, to $16.75.