Electronic fixed income outfit eSpeed is looking for growth in foreign exchange and futures markets after its failed attempt to acquire European bond trading network MTS racked up costs of $2.6m and propelled the firm to a net loss of $1.5m in the second quarter.
The failed acquisition along with $0.6m for patent litigation costs and a non-cash charge of around $0.1m relating to business partner securities pushed the firm $1.5m into the red for the three months to June 30, compared with a profit of $9.1m for the same period last year.
Excluding items the company reported a profit of $1.9m, or $0.04 per share. Market analysts had expected the firm to post five cents per share profit.
Total revenues for the second quarter 2005 were down 13% to $37.5m, compared to $42.8m for Q2 2004. Second quarter fully electronic revenues slumped to $18.8m compared to $29.2m last year.
On a more positive note, sales at its software solutions unit in the second quarter were up to $10.4m from $7.6m in the second quarter 2004.
Fully electronic volume was $7.1 trillion for Q2 2005, up 11.4% from the previous quarter and 6.3% higher than the same period last year.
Howard Lutnick, eSpeed chairman and CEO, says the firm's customised pricing and technology solutions has helped improve market share in the core US Treasury business.
Lutnick says the company will focus on developing new products and both foreign exchange and futures will have a positive impact on the business next year.
Looking ahead, eSpeed says it expects to generate revenues of approximately $37m and report profit of between one and two cents per share in the third quarter.
Lutnick says the company expects the seasonally slower third quarter to be a turning point: "We expect that the business advancements we are currently making will begin to have a positive impact on our financial results in the fourth quarter."