Nyfix cuts staff as costs keep on rising

Nyfix cuts staff as costs keep on rising

Nyfix cut 10% of its global workforce in June in a bid to reduce annual costs by $5 million, but the US trading systems vendor warns it will incur further costs from its Euro Millennium ATS and the integration of its Fixcity acquisition during the rest of the year.

The struggling vendor is reporting net losses for the second quarter of $6.8 million, a small improvement on the loss of $7.4 million reported for Q207.

Group revenue was down seven per cent to $28.6 million, compared to $30.8 million for second quarter 2007. Nyfix says this reflects a $3.2 million reduction in revenues across all businesses from the shut down of its Fusion order management business last year.

The closure of the Fusion OMS unit contributed to a 56% fall in net revenue at Nyfix's OMS division, which dropped to $1.2 million, compared to $2.6 million Q207, as well as a 22% decrease in transaction services division net revenues which fell to $10.8 million, compared to $13.9 million for Q207.

On a more positive note, the acquisition of London-based e-trading and FIX messaging outfit Fixcity earlier this year helped boost revenues at the vendor's FIX division to $16.6 million, 17% higher than the $14.2 million reported for second quarter 2007.

But the company has incurred integration costs following the acquisition in April, including a $0.5 million write-off of capitalised software - which was replaced by acquired technology - and $0.1 million of third-party consulting costs related to the integration of the Fixcity technology platform.

In addition, Nyfix's London-based Euro Millennium venture continued to rack up costs in the quarter. In Q2 the vendor incurred costs of $2.5 million for Euro Millennium, up from costs of $2.2 million in Q1.

Euro Millennium was launched in March 2008 for matching UK listed equities and the platform has recently been expanded to match cash equities in other European markets, including Belgium, France, Germany and the Netherlands.

But the vendor says to date "there have been no material revenues from Euro Millennium as efforts continue to connect new clients and to enhance the electronic trading capabilities of existing clients to take advantage of the platform". Nyfix expects losses related to Euro Millennium to continue throughout 2008, with a loss between $2.0 and $2.5 million expected in third quarter 2008.

Commenting on the results, Nyfix CEO, Howard Edelstein, says: "As we continue to make significant investments towards our long term growth initiatives such as Euro Millennium and Fixcity, we are also continuing to focus on improving the cost structure of our core businesses."

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