Moody’s reported revenue of US$487.6 million for Q2, 2008, a decrease of 25% from US$646.1 million for the same quarter of 2007.  Operating income declined 36% to US$233.7 compared to US$363.7 million for the same period of 2007.   Revenue for 6 months of 2008 had declined by US$310.8 million (-25%).  Operating income for the first half declined to US$433.0 million (35%).

Moody’s CEO Raymond McDaniel, stated: “Moody’s results in the socond quarter impoved over the previous quarter, although they were well below record prior-year comparables.  First half results reflect persistently difficult credit market conditions and we remain cautious about recovery in the credit markets for the remainder of 2008.” 

Moody’s reputation received another blow when the Financial Times reported in May that Moody’s had assigned incorrect tripple-A ratings to constant proportion debt obligations (CPDOS) due to a computer bug.  Moody’s staff had discovered the bug in early 2007 and did not downgrade the ratings until early 2008.  Moody’s has initiated disciplinary action against management and staff involved.  

McDaniel stated in the Q2 earnings call to analysts “We are reaffirming our previous full-year EPS guidance of $1.90 to $2.00, based on solid base of recurring revenue from the ratings business, good growth from analytics and cost reductions.”

Source: Moody’s Earnings Release

BIIA Newsletter July / August 2008 Issue