Feb 06 2008
Moody’s earnings fall, expects 2008 decline
NEW YORK (AP) — Credit ratings and financial research and analytics provider Moody’s Corp. said Thursday its fourth-quarter earnings fell 54% because of declines in revenue from ratings and structured finance.
Net income fell to $127.3 million, or 49 cents per share, from $278.6 million, or 97 cents per share, during the same period the previous year.
Analysts polled by Thomson Financial, on average, forecast earnings of 47 cents per share for the quarter on revenue of $481.7 million.
Revenue totaled $504.9 million during the fourth quarter.
Continued deterioration of the credit markets pushed Moody’s ratings and structured finance revenue lower as fewer companies rated new bonds and other securities during the fourth quarter.
Revenue at Moody’s Investors Service, the ratings agency division of Moody’s, fell 16% to $460.7 million. Ratings revenue fell 23%. U.S. structured finance revenue plunged 53%, while international structured finance revenue tumbled 17%.
Structured finance deals include bonds and securities backed by assets such as mortgages. As delinquencies and defaults among mortgages has risen in recent months, investors have essentially stopped buying bonds backed by the troubled loans. That has led bond issuers to halt their issuance, leading to a decline in ratings-generated revenue for Moody’s.
For the year, Moody’s earnings fell to $701.5 million, or $2.58 per share, from $753.9 million, or $2.58 per share, in 2006. Earnings per share did not decline with net income because there were fewer shares outstanding in 2007.
The company said its 2008 earnings will decline because of continued weakness in the credit markets.
Moody’s (MCO) anticipates it will earn between $2.17 and $2.25 per share for the year.
Analysts polled by Thomson Financial, on average, forecast earnings per share of $2.13 for the year on revenue of $2.04 billion.
In 2007, Moody’s earned $701.5 million, or $2.58 per share, on revenue of $2.26 billion.
Moody’s said revenue at its ratings agency division, Moody’s Investors Service, will fall in the mid-to-high teens percentage range in 2008 as issuance of new debt will remain low during the first half of the year.
U.S. structured finance revenue - the rating of bonds and securities backed by assets such as mortgages - at Moody’s Investors Service is likely to fall around 45% in 2008, Moody’s said in a statement. 
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