Knight Capital's profits plunge

Knight Capital Group Inc. posted a 35% drop in first-quarter profits on lower revenues and a loss from discontinued operations, falling short of analysts estimates. The Jersey City, N.J.-based financial services firm posted net income of $31.9 million, or 31 cents per share, down from $49.1 million, or 47 cents per share in the year-ago period. Revenues for the quarter slid 13% to $241.7 million, compared to $277.2 million during the first quarter of 2006. Analysts surveyed by Thomson Financial forecasted earnings of 33 cents per share. The results adversely affected by a $1.3 million, or penny per share, loss from discontinued operations due to a regulatory charge related to Knight Financial Products LLC, which the company sold to Citigroup Inc. in 2004. Knight's asset management business, Deephaven Capital Management, generated $60.7 million in asset management fees, compared to $70.5 million in the first quarter of 2006. Deephaven's assets under management reached $3.9 billion as of April 1, compared to $3.1 billion one year earlier. "The overall trading environment was marked by a slight decrease in retail investing during the first three months, but the trend was offset by the presence of professional traders driving more volume," said Thomas M. Joyce, chairman and chief executive of Knight Capital, in a statement. Last week, a NASD hearing panel issued $100,000 in fines against both Kenneth Pasternak, former chief executive of Knight Securities LP, and John Leighton, former head of the firm's institutional sales desk.