Nasdaq, Inc.
Oct 19, 2006

NASDAQ Announces Third Quarter 2006 Results

- Operating Income Up 116.9 Percent From Prior Year -

NEW YORK, Oct. 19, 2006 (PRIMEZONE) -- The Nasdaq Stock Market, Inc. ("NASDAQ®"); (Nasdaq:NDAQ), today reported third quarter 2006 net income of $30.2 million, or $0.22 per diluted share, an increase of 69.7% from $17.8 million, or $0.16 per diluted share, in the third quarter of 2005, and 81.9% from $16.6 million, or $0.13 per diluted share, in the second quarter of 2006.

Gross margin, representing total revenues less cost of revenues, was $171.2 million in the third quarter of 2006, an increase of 31.1% from $130.6 million in the year-ago period, and up marginally from $171.1 million reported in the second quarter of 2006.

NASDAQ's Chief Executive Officer, Robert Greifeld commented, "Third quarter operating income grew an impressive 116.9% through the continued execution of our strategic plan. We've been able to improve profitability through successful acquisitions and gains in market share, while maintaining our expense control discipline. Significant gains in our share of trading in NYSE-listed stocks have been achieved, with our matched market sharing growing to 12.1% in the quarter, up from 4.7% in the year-ago quarter. We are on track to reach our 2006 objectives through continued innovation and consistent execution."


 Recent Highlights

  --  Continued success in obtaining switches from other markets, with
      76 companies transferring their listing to NASDAQ during the
      year.
  --  Completed the acquisition of PrimeZone Media Network, enabling
      NASDAQ to offer information distribution and multimedia services
      as part of its Corporate Client services.
  --  Began migration to our single book platform, which when
      completed will provide market participants with a deeper
      liquidity pool, improved system performance and greater order
      interaction.
  --  Announced plans to introduce the NASDAQ Options Market in third
      quarter 2007, pending SEC approval.
  --  Became operational as an exchange in NASDAQ-listed securities on
      August 1, 2006.
  --  PowerShares Capital Management LLC launched ten new exchange-
      traded funds (ETFs) on NASDAQ based on FTSE RAFI fundamental
      indexes.  NASDAQ also has agreed to transfer its sponsorship of
      the QQQs to PowerShares, significantly expanding sales
      distribution of the QQQs and opportunities to further build its
      investor base.
  --  Secured two new TotalView Enterprise licenses allowing
      distribution of TotalView data to more than 57,000 additional
      non-professional subscribers, and grew professional subscribers
      7% from prior quarter and more than doubled them from the
      year-ago quarter.
  --  Enhanced ModelView, NASDAQ's web-based historical data product,
      to include NYSE- and Amex-listed data as well as INET liquidity.

Charges Associated with NASDAQ's Cost Reduction Program and INET Integration

Included in total expenses for the third quarter 2006 are pre-tax charges of $4.8 million relating to NASDAQ's continuing efforts to reduce operating expenses and improve the efficiency of its operations, as well as to integrate INET. These charges include:


  --  Technology Review -- NASDAQ recorded expenses of $3.4 million in
      the quarter associated with its technology review, in which it
      previously changed the estimated useful life of some assets as
      it migrates to lower cost operating platforms and processes.
  --  Workforce Reductions -- NASDAQ recorded charges of $0.9 million
      in the quarter for severance and outplacement costs.
  --  Real Estate -- NASDAQ recorded charges of $0.5 million in the
      quarter as part of its real estate consolidation plans.

2006 Outlook

NASDAQ is raising guidance for the full-year 2006:


  --  Net income in the range of $89.0 million to $92.0 million for
      the year, including the impact of charges associated with
      NASDAQ's cost reduction program, INET integration, and losses on
      extinguishment of debt noted below.
  --  Gross margin in the range of $675.0 million to $680.0 million.
  --  Total expenses in the range of $466.0 million to $471.0 million.

2006 total expense projections include approximately $55.0 million to $60.0 million of pre-tax charges associated with NASDAQ's continuing cost reduction efforts, INET integration and investment in the London Stock Exchange. These charges include:


  --  Approximately $30.0 million to $33.0 million in charges
      primarily related to NASDAQ's decision to migrate to less
      expensive technology operating platforms.
  --  Approximately $6.0 million to $7.0 million in charges related to
      NASDAQ's plans to exit certain real estate facilities.
  --  Approximately $6.0 million to $7.0 million in severance expenses
      associated with NASDAQ's plans for workforce reductions.
  --  $20.9 million in charges related to the early extinguishment of
      debt and the refinancing of a credit facility, partially offset
      by an $8.2 million foreign currency gain related to our
      investment in the London Stock Exchange, both recorded in the
      second quarter.

NASDAQ's Chief Financial Officer, David Warren, commented: "NASDAQ's third quarter results highlight our ability to quickly and efficiently integrate acquisitions, allowing them to contribute to improved margins. When coupled with revenue growth derived from our product innovations and our ability to reduce legacy operating expenses, we have created an effective business model designed to drive growth in profitability. We are now in the final steps of our INET integration and, once completed, fully expect to realize all deal synergies. Our continued ability to execute to plan allows us to improve our outlook for the remainder of 2006."

Q3 Financial Review

Total Revenues and Gross Margin -- Gross margin increased 31.1% in the third quarter to $171.2 million, up from $130.6 million in the year-ago quarter, and is up marginally from $171.1 million reported in the second quarter of 2006.

Market Services

Market Services gross margin increased to $111.3 million or 48.8% from prior year, and increased 3.3% from prior quarter.


                            Three Months Ended      % Variance from
                         -------------------------  ----------------
                         Sept 30  June 30  Sept 30   Prior    Prior
                          2006     2006     2005    Quarter   Year
                         -------  -------  -------  -------  -------
                               (in millions)
 NASDAQ Market Center
  Execution and trade
   reporting revenues    $ 286.7  $ 291.4  $ 116.9     (1.6)%   NM
  Access services
   revenues                 15.6     13.1     19.8     19.1 % (21.2)%
  Tape fee revenue
   sharing                  (5.4)    (5.3)    (3.5)     1.9 %  54.3 %
  NASDAQ General Revenue
   Sharing Program            --     (0.1)    (0.1)     NM      NM
                         -------  -------  -------
   Total NASDAQ Market
    Center revenues        296.9    299.1    133.1     (0.7)%   NM
 Cost of revenues
  Liquidity rebates       (153.2)  (170.6)   (64.8)   (10.2)%   NM
  Brokerage, clearance
   and exchange fees       (78.5)   (69.3)   (25.0)    13.3 %   NM
                         -------  -------  -------
   Total cost of revenues (231.7)  (239.9)   (89.8)    (3.4)%   NM
                         -------  -------  -------
   Gross margin from
    NASDAQ Market Center    65.2     59.2     43.3     10.1 %  50.6 %

 NASDAQ Market Services
  Subscriptions
  Proprietary revenues      18.0     17.6      9.0      2.3 %   NM
  Non-proprietary revenues  29.5     31.1     38.9     (5.1)% (24.2)%
  NASDAQ Revenue Sharing
   Programs                 (2.0)    (2.6)    (1.2)   (23.1)%  66.7 %
  UTP Plan revenue sharing  (6.9)    (6.2)   (19.5)    11.3 % (64.6)%
                         -------  -------  -------
   Total NASDAQ Market
    Services Subscription
    revenues                38.6     39.9     27.2     (3.3)%  41.9 %
                         -------  -------  -------
  Other Market Services
   revenues                  7.5      8.6      4.3    (12.8)%  74.4 %
                         -------  -------  -------
 Gross Margin from Market
  Services                $111.3   $107.7    $74.8      3.3 %  48.8 %
                         =======  =======  =======

 NM - Not meaningful. Denotes variances equal to or greater than 100%

  --  NASDAQ Market Center gross margin increased from the year-ago
      quarter primarily because of INET results, increases in average
      daily trading volume, and increases in trade execution market
      share for NYSE- and AMEX-listed equities.  Access services
      revenue declined from the year-ago quarter due to the retirement
      of legacy products in December 2005.  Increases from prior
      quarter are primarily related to the reduction in clearing costs
      for INET transactions.  INET trades are now cleared through
      NASDAQ's existing clearing broker, thereby reducing cost of
      revenues for the quarter.
  --  Market Services Subscriptions revenues increased from the year-
      ago quarter as less data revenue was shared under the UTP Plan.
      NASDAQ's UTP market share increased primarily due to the INET
      acquisition which resulted in INET trades being reported to
      NASDAQ.  Also, effective February 7, 2006, NASDAQ is no longer
      required to share NQDS revenue, thereby reducing the amount of
      revenue shared with UTP Plan participants.  This change is also
      the primary driver for the growth in proprietary revenues and
      the decline in non-proprietary revenues when compared to the
      year-ago quarter.
  --  Other Market Services revenues increased from prior year due
      primarily to revenues earned under a contract between NASD and
      NASDAQ for the operations of the Over-the-Counter Bulletin Board
      (OTCBB), which took effect on October 1, 2005.

Issuer Services

During the quarter Issuer Services revenues increased 7.2% to $59.8 million from the prior year quarter and declined 5.7% from prior quarter.


                              Three Months Ended     % Variance from
                          -------------------------- -----------------
                          Sept 30  June 30  Sept 30   Prior    Prior
                           2006     2006     2005    Quarter    Year
                          -------  -------  -------  -------  -------
                                (in millions)
 Corporate Client Group
  Annual renewal fees      $ 27.3   $ 26.9   $ 27.3     1.5 %    --
  Listing of additional
   shares fees                9.4      9.2      9.6     2.2 %  (2.1)%
  Initial listing fees        5.6      6.0      7.2    (6.7)% (22.2)%
  Corporate Client
   services                  10.4     10.2      2.3     2.0 %    NM
                          -------  -------  -------
    Total Corporate Client
     Group revenues          52.7     52.3     46.4     0.8 %  13.6 %
                          -------  -------  -------

 NASDAQ Financial Products
  Licensing revenues          6.0      9.7      8.3   (38.1)% (27.7)%
  Other revenues              1.1      1.4      1.1   (21.4)%    --
                          -------  -------  -------
   Total NASDAQ Financial
    Products  revenues        7.1     11.1      9.4   (36.0)% (24.5)%
                          -------  -------  -------
 Total Issuer Services
  revenues                 $ 59.8   $ 63.4   $ 55.8    (5.7)%   7.2 %
                          =======  =======  =======

 NM - Not meaningful. Denotes variances equal to or greater than 100%

  --  Corporate Client Group revenues increased from prior year driven
      primarily by revenues generated from recent acquisitions, which
      are included in the Corporate Client services line.
  --  NASDAQ Financial Products licensing revenues decreased from the
      prior year and prior quarter due to a decline in licensing fees
      associated with options traded for NASDAQ licensed ETFs.  As
      reported in the second quarter 2006 Form 10-Q, recent court
      decisions have impacted NASDAQ's ability to charge a license fee
      for options that track NASDAQ ETF's.

Total Expenses -- Total expenses increased 4.0% to $103.3 million from $99.3 million in the year-ago quarter and decreased 23.4% from $134.8 million in the prior quarter. Third quarter 2006 expenses increased from last year primarily due our recent acquisitions of INET, Carpenter Moore, Shareholder.com, and PrimeZone. Expenses declined from second quarter 2006 primarily due to higher charges in the prior quarter related to our cost reduction program and INET integration, the early extinguishment of debt, and the refinancing of a credit facility. Partially offsetting second quarter 2006 charges was the realization of a foreign currency gain related to our investment in the London Stock Exchange, also recognized in the second quarter 2006.

Earnings Per Share

As stated above, third quarter earnings per diluted share was $0.22 versus $0.13 in the second quarter of 2006 and $0.16 per diluted share in the year-ago quarter. NASDAQ's weighted average shares outstanding used to calculate diluted earnings per share was 150.8 million in the quarter versus 145.2 million in the second quarter 2006 and 119.4 million in the year-ago quarter. The outstanding share count increased from the year-ago quarter and prior quarter primarily due to the issuance of approximately 26.5 million shares in equity offerings in the first and second quarters of 2006.

NASDAQ® is the largest electronic equity securities market in the United States. With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to category-defining companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology industries. For more information about NASDAQ, visit the NASDAQ Web site at www.nasdaq.com or the NASDAQ Newsroom(sm) at www.nasdaqnews.com. NDAQF

Cautionary Note Regarding Forward-Looking Statements

The matters described herein may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include projections about our future financial results, as well as the implementation dates and benefits of certain strategic initiatives. The Nasdaq Stock Market, Inc. cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements include projections which have not been reviewed by independent auditors of NASDAQ. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ's control. These factors include, but are not limited to, NASDAQ's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ's annual report on Form 10-K, quarterly reports on Form 10-Q, and periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NASDAQ that the projections will prove to be correct. We undertake no obligation to release any revisions to any forward-looking statements.


                          The Nasdaq Stock Market, Inc.
              Unaudited Condensed Consolidated Statements of Income
            (in millions, except per share amounts and other drivers)

                           Three Months Ended       Nine Months Ended
                      ----------------------------  ------------------
                      Sept. 30, June 30,  Sept. 30,    September 30,
                        2006      2006      2005      2006       2005
                      -------   -------   -------   --------   -------
 Revenues
 Market Services      $ 343.0   $ 347.6   $ 164.6   $1,027.9   $ 453.4
 Issuer Services         59.8      63.4      55.8      182.0     166.7
 Other                    0.1        --        --        0.4       0.2
                      -------   -------   -------   --------   -------
   Total revenues       402.9     411.0     220.4    1,210.3     620.3
 Cost of revenues
 Liquidity rebates     (153.2)   (170.6)    (64.8)    (491.0)   (169.4)
 Brokerage, clearance
  and exchange fees     (78.5)    (69.3)    (25.0)    (215.0)    (63.6)
                      -------   -------   -------   --------   -------
   Total cost
    of revenues        (231.7)   (239.9)    (89.8)    (706.0)   (233.0)
                      -------   -------   -------   --------   -------
 Gross margin           171.2     171.1     130.6      504.3     387.3
                      -------   -------   -------   --------   -------

 Expenses
 Compensation
  and benefits           47.5      48.0      36.2      144.5     110.4
 Marketing and
  advertising             3.5       3.8       1.5       12.3       4.8
 Depreciation
  and amortization       14.3      21.5      13.6       60.3      46.8
 Professional and
  contract services       6.8       7.3       7.4       23.0      21.4
 Computer operations
  and data
  communications          9.5      10.3      15.4       29.7      47.5
 Provision for
  bad debts              (2.2)      1.8       0.1       (0.3)       --
 Occupancy                9.5       8.2       7.2       25.7      21.3
 General and
  administrative          5.8      24.8       7.4       37.3      23.4
                      -------   -------   -------   --------   -------
   Total direct
    expenses             94.7     125.7      88.8      332.5     275.6
 Support costs
  from related
  parties, net            8.6       9.1      10.5       25.8      31.3
                      -------   -------   -------   --------   -------
   Total expenses       103.3     134.8      99.3      358.3     306.9
                      -------   -------   -------   --------   -------
 Operating income        67.9      36.3      31.3      146.0      80.4
 Interest income          7.6       6.3       4.0       18.3       8.5
 Interest expense       (25.7)    (24.4)     (4.7)     (66.5)    (12.2)
 Dividend income           --       9.2        --        9.2        --
 Minority interest        0.1       0.3       0.1        0.6       0.1
                      -------   -------   -------   --------   -------
 Income before
  income taxes           49.9      27.7      30.7      107.6      76.8
 Income tax provision    19.7      11.1      12.9       42.7      32.3
                      -------   -------   -------   --------   -------
 Net income           $  30.2   $  16.6   $  17.8   $   64.9   $  44.5
                      =======   =======   =======   ========   =======

 Net income
  applicable to
  common stockholders:
   Net income         $  30.2   $  16.6   $  17.8   $   64.9   $  44.5
   Preferred stock:
   Dividends declared      --        --      (0.7)      (0.4)     (2.5)
   Accretion of
    preferred stock        --        --      (0.7)      (0.3)     (3.0)
                      -------   -------   -------   --------   -------
 Net income
  applicable to
  common stock-
  holders             $  30.2   $  16.6   $  16.4   $   64.2   $  39.0
                      =======   =======   =======   ========   =======
 Basic and diluted
  earnings per share:
   Basic              $  0.27   $  0.16   $  0.20   $   0.63   $  0.49
                      =======   =======   =======   ========   =======
   Diluted            $  0.22   $  0.13   $  0.16   $   0.51   $  0.42
                      =======   =======   =======   ========   =======

 Weighted-average
  common shares
  outstanding for
  earnings per share:
   Basic                111.7     105.2      81.2      101.7      79.9
   Diluted              150.8     145.2     119.4      141.7     107.4

 Other Drivers
  Average daily share
   volume in NASDAQ
   securities
   (in millions)        1,852     2,142     1,653      2,038     1,809

  Matched market
   share in NASDAQ
   securities (a)        48.7%     48.4%     27.2%      49.1%     26.6%

  Total market share
   in NASDAQ
   securities (b)        76.6%     77.8%     56.0%      78.2%     55.5%

  Matched market
   share in NYSE
   securities (a)        12.1%      8.3%      4.7%       9.1%      3.7%

  Total market
   share in NYSE
   securities (b)        27.5%     22.7%     18.1%      24.1%     16.7%

  Total market
   share in AMEX
   securities (b)        47.7%     46.1%     32.9%      45.9%     32.3%

  Initial Public
   Offerings               20        35        46         87        91
    Secondary Offerings    32        54        50        152       145
    Number of listed
     companies (c)      3,206     3,205     3,214      3,206     3,214

 (a)  Transactions executed on NASDAQ's systems.

 (b)  Transactions executed on NASDAQ's systems and internal trades
      reported to NASDAQ.

 (c)  Beginning September 30, 2006 number of listed companies
      also includes separately listed ETFs.


                          The Nasdaq Stock Market, Inc.
                      Condensed Consolidated Balance Sheets
                                  (in millions)

                                     September 30,   December 31,
                                         2006            2005
                                       --------        --------
                                      (unaudited)
 Assets
 Current assets:
  Cash and cash equivalents            $  440.6        $  165.2
  Available-for-sale investments,
   at fair value                        1,419.8           179.4
  Receivables, net                        228.5           207.6
  Deferred tax assets                      11.5            10.0
  Other current assets                     34.4            34.8
                                       --------        --------
 Total current assets                   2,134.8           597.0
 Property and equipment:
  Land, buildings and
   improvements                              --            60.9
  Data processing equipment
   and software                           185.6           180.0
  Furniture, equipment and
   leasehold improvements                 106.7           115.6
                                       --------        --------
                                          292.3           356.5
   Less accumulated depreciation
    and amortization                     (229.3)         (233.9)
                                       --------        --------
 Total property and
  equipment, net                           63.0           122.6
 Non-current deferred
  tax assets                              125.6           133.3
 Goodwill                                 999.6           961.9
 Intangible assets, net                   204.5           215.5
 Other assets                              14.2            16.5
                                       --------        --------
 Total assets                          $3,541.7        $2,046.8
                                       ========        ========

 Liabilities
 Current liabilities:
  Accounts payable and
   accrued expenses                    $  118.4        $  118.9
  Accrued personnel costs                  42.3            55.3
  Deferred revenue                         86.7            53.6
  Other accrued liabilities                79.9            61.8
  Current portion of debt
   obligations                             11.7             7.5
  Payables to related parties              10.1            28.2
                                       --------        --------
 Total current liabilities                349.1           325.3
 Debt obligations                       1,594.5         1,184.9
 Accrued pension costs                     24.6            25.8
 Non-current deferred tax
  liabilities                              88.1            95.2
 Non-current deferred revenue              96.5            92.0
 Other liabilities                         71.0            69.6
                                       --------        --------
 Total liabilities                      2,223.8         1,792.8

 Minority interest                          0.4             1.0

 Stockholders' equity
 Common stock                               1.3             1.3
 Preferred stock, Series D
  (and Series C at December 31, 2005)        --            95.0
 Additional paid-in capital             1,040.9           383.7
 Common stock in treasury, at cost       (245.9)         (613.4)
 Accumulated other comprehensive
  income (loss)                            71.2            (1.3)
 Deferred stock compensation                 --            (4.9)
 Common stock issuable                       --             6.8
 Retained earnings                        450.0           385.8
                                       --------        --------
 Total stockholders' equity             1,317.5           253.0
                                       --------        --------
 Total liabilities, minority interest
  and stockholders' equity             $3,541.7        $2,046.8
                                       ========        ========
CONTACT:  NASDAQ 
          Media Contact:
            Bethany Sherman 
            (212) 401-8714
          Investor Contact:
            Vincent Palmiere
            (212) 401-8742