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LaBranche Earnings Fall

Investors react negatively to the profit slide.

Updated from 8:50 a.m. (EDT)

Big Board

specialist firm



reported a third-quarter decline in earnings, leading to a big sell-off in the stock.

Shares of LaBranche, in morning trading, were down as much as 13% to $9.55. The stock was falling even though the third-quarter results marked an improvement from a particularly brutal second quarter.

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In the third quarter, LaBranche earned $7.8 million, or 13 cents a share, compared with $9.2 million, or 15 cents a share. But revenue rose 50% to $125.4 million.

Much of the revenue gain came from interset on customer margin accounts. Trading-related revenue, however, declined somewhat from a year ago.

Analysts, as surveyed by Thomson Financial, were looking for earnings of 11 cents a share.

The third-quarter results were an improvement over the second quarter, during which the big New York Stock Exchange trading firm reported a $22.4 million loss.

The third-quarter results included a $17.6 million pretax gain in the value of LaBranche's portfolio of restricted shares of the NYSE Group, the parent company of the New York Stock Exchange. Excluding that gain, the specialist firm incurred an operating loss of $2.1 million, or 3 cents a share.

The sell-off was sparked by the disappointing operating figure.

The big revenue driver for LaBranche was a big gain in interest on margin accounts and borrowed stock. Revenue from interest payments rose $38 million from $9.5 million.

But trading-related revenue declined 4% from a year ago to $45 million.