NEW YORK (AP) — Moody's fourth-quarter net income jumped 66 percent and revenue blew away expectations, but shares slid with many expecting the ratings agency will be the next target of the Justice Department, which filed a suit against a rival for its actions before the housing market collapse.
The Obama administration accused Standard & Poor's on Tuesday of refusing to warn investors that the housing market was collapsing in 2006 because it would be bad for business.
In the days since S&P announced that the lawsuit would be filed Moody's shares have tumbled, and they fell another 9 percent Friday.
For the quarter ended Dec. 31, the New York company earned $160.1 million, or 70 cents per share, up from $96.2 million, or 43 cents per share, in the same quarter last year.
Revenue jumped 33 percent to $754.2 million, easily topping Wall Street expectations for revenue of $687.1 million in revenue, according to FactSet.
U.S. revenue rose 40 percent to $400.9 million, while overseas revenue increased 26 percent to $353.3 million.
Revenue from Moody's Investors Service, its credit rating arm, rose 42 percent to $519.4 million, as global corporate finance revenue jumped 73 percent to $244.9 million on higher demand for credit ratings.
Why Moody's was not included in the Justice Department action was debated all week, though the direction of the company's stock suggests that most believe that is only a matter of time. And experts said the lawsuit could serve as a template for future action against Fitch and Moody's, the other two major credit rating agencies.
CEO Raymond McDaniel said that he had no knowledge of any pending action against the company during a conference call with investors Friday.