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Penson Misses Earnings Due to Expenses, Weak Trading

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Penson Worldwide (PNSN) reported net revenues of $71.11 million and a net loss of $7.4 million, or $0.29 per share, for the second quarter ended June 30, including $7.6 million in certain pre-tax expenses (or $0.26 a share) related to the June 25 purchase of 95 clearing contracts from Ridge Clearing & Outsourcing Solutions.

Analysts had expected the company – which released second-quarter earnings after the markets had closed on July 22 — to have earnings of $0.06 a share on sales of $71.13 million.

After the Ridge acquisition, Penson said that it is the second-largest clearing firm based on correspondent count.

Other one-time charges in the quarter were related to the signing of an 11-year outsourcing agreement with Broadridge Financial Solutions and from severance tied to reducing Penson’s overhead, which aims “to push annual savings to the high end of the previously announced $7 million-$10 million range,” the company said in a press release.

Penson said that, excluding these expenses, operating results were also affected by lower than expected trading volumes industrywide in June and other conditions.

“This was a transition quarter in many ways,” explained CEO Philip A. Pendergraft in a statement. “We completed the transaction with Broadridge, which will both expand our revenues and lower our existing cost base, but also resulted in a number of one-time costs this quarter.”

Penson had 385 revenue-generating correspondents at June 30, 2010, compared to 297 at March 31, 2010. Ridge added 95; Penson GHCO futures operations added two, for a total of 58; and Penson securities clearing operations reduced its count by 9, for a total of 232, according to the company.

As of June 30, 2010, there was a pipeline of 24 new correspondents, Penson said.