The Nasdaq said Wednesday that it is laying off 137 employees, or about 10 percent of its staff. The staff reduction "is in response to market conditions affecting much of the U.S. economy--which, for Nasdaq, translates into weakness" in the number of new companies listed, "including a sharp decline in the number of initial public offerings," the company said in a statement.
"Nasdaq is not immune to changes in market conditions," Chief Executive Wick Simmons said in the statement. "With the changes we are making we believe that we will be correctly sized for the current and foreseeable market conditions."
The Nasdaq composite index has declined from an all-time high of more than 5,000 in March of last year to about 2,000 now. Since January, the index has lost about 16 percent of its value.
When the market was rising in the late 1990s, an increasing number of companies, especially technology companies, went public to cash in. But in recent months, the number of IPOs has dwindled.
By the end of last week, only 25 companies had gone public on the Nasdaq this year. During the same period last year, 198 companies went public. Because the Nasdaq collects fees from each IPO, its revenue from those deals is "way down," a company representative said Wednesday.
But the Nasdaq's decline has hurt in other ways. Companies pay the exchange to maintain their listings on the stock market. But the number of companies listed has declined, largely because of the market slump.
The Nasdaq requires that companies listed on the exchange maintain a share price above $1 or $5, depending on the stock. This year, the Nasdaq has delisted nearly 360 companies from the stock market, many because they were unable to meet those standards. The list of companies kicked of the Nasdaq includes former highfliers such as Drkoop.com, PlanetRx and TheGlobe.com.
Factoring in companies that have joined the Nasdaq through IPOs or by transferring their listing to its market, the exchange says it has lost a net of 300 companies, or about 6 percent.
The stock market also gains revenue from the sale of data about its market and collects a fee from each transaction that occurs on its market. But revenue from both of those is also falling, according to the company.
With the market going down, investors are no longer eager to get real-time quotes. And the average number of trades on the market has declined from about 2.1 billion a day in the first quarter to 1.65 billion now.
The layoffs at the Nasdaq happened across the company and did not affect any particular department, the representative said. The layoffs are immediate, and those laid off will receive a severance package, the representative said.