Knight Trading Drops on Q1 Warning

Knight Trading Group (Nasdaq:NITE) fell US$1.25 to $11.63 in morning trading Wednesday, after the online brokerage said a “difficult market environment” will push earnings below expectations for the first quarter ended March 31st.

The Jersey City, New Jersey-based company lowered its forecast forfirst-quarter earnings to 18 to 20 cents per share, including 8 cents incharges for international expansion, down from an earlier forecast of 32 to 40 cents per share.

“Overall market conditions during the first quarter fell significantly shortof the benchmarks used in Knight’s first quarter projections,” the companysaid.

During the quarter, the Nasdaq Composite Index fell 25.5 percent,while the Dow Jones Industrial Average slipped 8.4 percent. Both indexesdropped to their lowest levels in more than two years.

“The market environment over the first quarter was the most difficult thatKnight has encountered since our founding in 1995,” said chairman, presidentand chief executive officer Kenneth D. Pasternak.

“Investors who had fled to the relative safety of large-cap stocks duringthe fourth quarter found little refuge in any equity securities during thisfirst quarter,” Pasternak said. “Trading patterns over the first quarterindicate that an increasing percentage of our order flow is fromprofessional traders — evidence that the self-directed investor hascontinued to ride out this bear market on the sidelines.”

Pasternak said that Knight remains well positioned for the future.

“Knight’sflexible expense structure, in conjunction with our increasingly diverseproduct and client base and benefits of scale, have all contributed toKnight’s ability to perform and profit during these intensely adverse marketconditions,” he said.

Knight said it will report results before the market opens on April 18th.

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