One on One with Robert Greifeld, CEO, NASDAQ
Tuesday, February 13, 2007
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SUSIE GHARIB: Shares of NASDAQ Stock Market Inc plunged 11 percent today, even though the company reported solid fourth quarter earnings and revenues. Excluding special items, the nation's second largest equity market earned $0.24 a share, right in line with estimates. Revenues came in higher than analyst forecasts, surging 72 percent to $447 million. And the exchange said it expects earnings to grow more than 40 percent in 2007. But investors still focused on news that the NASDAQ failed in its bid to buy the London Stock Exchange. It's a major setback for NASDAQ CEO Robert Greifeld, who pursued the London exchange for almost a year. When I talked with Greifeld earlier today, I asked him, "what's plan B?"
ROBERT GREIFELD, CEO, NASDAQ: well, certainly NASDAQ has a global brand image that's aspirational for many. So there's no lack of opportunity for us to do transactions both domestically and internationally. In 2007, we will do a deal, we can't announce with who or when, but there will be a deal done.
GHARIB: Bob, have you gotten calls from other exchanges since the London Stock Exchange deal fell apart?
GREIFELD: Well, it's not since but it's before and after, certainly.
GHARIB: And can you share with us a little bit about what exchanges you might be interested in talking about?
GREIFELD: No, I cannot, Susie. But I will say this, we're focused on the domestic market. We're involved with a number of different conversations. There will be a transaction that happens in 2007. And the key thing for our shareholders is we will not do a transaction unless it meets or discipline. That is it has to accrue to our shareholders within a reasonable period of time and it has to be strategically significant. We chose not to win the LSE bidding because we thought it was too high of a risk for our shareholders and the price that shareholders wanted to sell to us. You know, we were firm at 1243. The price that shareholders wanted to sell to us was too high.
GHARIB: NASDAQ still owns 29 percent stake in the London Stock Exchange. Under what circumstances would you entertain again negotiations with the London exchange?
GREIFELD: Well, first, we maintain optionality on the stake, meaning that we could hold the stake or we could sell it. We are precluded under UK takeover rules from contemplating any further purchases of the LSE for 12 months. Right now we believe in Europe there's going to be increased competition. And that's one of the reasons why we were firm, best and final at 1243. Within the next year, you'll see if that increased competition comes about. And that will reveal, I think, a clearer sense of the true value of that asset.
GHARIB: What about your plans for Asia?
GREIFELD: We've done very well with Chinese IPOs. We're clearly in a leadership role. I think we're approaching 40 firms from China listing on the NASDAQ stock market. We're very proud of the fact that when the companies list here they actually are trading very well. So we expect to continue our great success in Asia. Last year we had an exciting one in India. So that part of our business is actually going quite well.
GHARIB: As you look at the NASDAQ's position competitively against the New York Stock Exchange, especially now that the New York Stock Exchange is getting bigger with its Euronext merger, how are you going to compete?
GREIFELD: Understand that when companies list on the market, they're looking to provide the best trading platform for their investors. The NASDAQ value proposition is there. It's very strong. It's why we've been so successful over the last couple years. So that stays regardless of any other consolidations that might happen in the space. So we're very happy with that positioning. We're executing on the plan. The numbers show that.
GHARIB: Don't take this the wrong way, but if everything is looking so rosy, why is it that the NASDAQ shares have been down about 15 percent since Friday?
GREIFELD: This is a one day or two-day event. So we're focused on running this business. We run it well and the one or two day blip in the stock price will not matter. And, again, the long-term trend line for our stock has been incredibly positive. So we focus on what we have to do. At the end of the day, we have to deliver earnings and the stock will follow.
GHARIB: As you look to future acquisitions, do you still see NASDAQ shares as a currency?
GREIFELD: Yes, we do. We certainly want the stock to be higher rather than lower when we look at transactions. But the stock is a very valid currency and certainly something we can look at in further transactions.
GHARIB: Thank you so much, Bob and good luck to you.
GREIFELD: Thank you.
