KFDA - NewsChannel 10 / Amarillo, TX: newschannel10.comGreenhill 3Q boosted by gain on Iridium buyout

Greenhill 3Q boosted by gain on Iridium buyout

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NEW YORK (AP) - Investment bank Greenhill&Co. on Thursday posted a third-quarter profit, helped by a gain on an acquisition by a subsidiary.

However, discounting that gain, some observers were disappointed with the results, and shares fell in midday trading.

The company earned $30.1 million, or $1.01 per share, for the July-September period in contrast to a loss of $12.2 million, or 42 cents a share, a year ago.

Revenue came to $116.3 million. The firm posted negative revenue figure of $14.9 million for the third quarter of 2008 after reversing previously-recorded merchant banking gains on publicly traded energy investments because of a sharp decline in energy prices.

Analysts polled by Thomson Reuters, on average, expected earnings of $1 per share on $103.4 million revenue.

Financial advisory revenue rose 15 percent to $42.4 million, as clients completed a number of deals. Merchant banking revenue amounted to $73.9 million, boosted by an unrealized investment gain of $66 million from the acquisition of Iridium Holdings by its subsidiary GHL Acquisition Corp.

The firm warned that fluctuations in Iridium's market value could increase the volatility of our quarterly revenue and earnings until the value of that investment is finally realized. In the fourth quarter to date, Iridium shares have declined.

Co-CEO Scott L. Bok said if they don't rebound, that could result in reversing a portion of the investment gain posted for the third-quarter.

Analyst David Trone of Fox-Pitt Kelton Cochran Caronia Waller said Wall Street estimates did not uniformly add in the benefit from the Iridium deal, which he calculated at 70 cents per share. Indeed, analysts' profit estimates ranged from 45 cents to $1.32a share.

Trone kept an "In line" rating on the stock.

Collins Stewart analyst William Tanona said revenue in the financial advisory segment was weaker than expected. And he expects Iridium's stock price decline to drag revenue down by about $17 million for the fourth quarter.

Tanona kept an "Hold" rating on the stock, but reduced his fourth-quarter forecast to a profit of 30 cents per share from 65 cents. The average estimate is 64 cents.

In midday trading, Greenhill shares fell $3.24, or 3.5 percent, to $88.96. the stock has changed hands between $54.65 and $96.09 in the past 52 weeks.

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