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Knight/Trimark tops reduced expectations

    Knight/Trimark Group, Inc. (Nasdaq: NITE) topped First Call estimates for the third quarter Wednesday, but it was a hollow victory following a profit warning that nearly halved analyst expectations.

    The company beat Wall Street estimates by a penny with earnings of 19 cents a share. However, estimates called for a profit of 30 cents a share prior to Monday's profit warning because of declining trading volumes. Knight/Trimark, which processes many of the stock trades that individual investors make on the Internet, said it would report profits of 17 to 19 cents a share.

    Shares in the firm were up 1/4 to 25 3/8. Monday's profit warning sent Knight/Trimark's stock down 12 percent. Shares are down more than two-thirds from its 81 5/8 high set in May.

    Net income for the third quarter of 1999 totaled $21.8 million, or 19 cents a share, a 66 percent increase from $13.2 million, or 13 cents a share a year ago. Knight/Trimark said revenue for the third quarter of 1999 rose 49 percent to $137.6 million, compared to $92.4 million for the third quarter of 1998.

    Third quarter revenue decreased 39 percent and net income fell 57 percent sequentially. The reduction in sequential earnings from the second quarter was blamed on third quarter seasonal trends which were exacerbated by lighter retail volume and reduced overall market volatility, said Knight/Trimark President and Chief Executive Officer Kenneth D. Pasternak.

    Trades executed fell 5 percent and shares traded fell 17 percent from the second quarter.

    "Future changes in market structure, including the increased use of electronic platforms, will undoubtedly benefit Knight/Trimark. In the long term, we anticipate year-over-year increases in volumes and earnings in excess of 30%,'' Pasternak said.