LaBranche & Co. (LAB), the New York Stock Exchange's (search) largest market maker, on Friday said it expects first-quarter profit to fall short of analysts' forecasts because of weak market conditions and higher program trading (search), sending its shares down as much as 12.3 percent.

New York-based LaBranche said it expects a profit of 2 cents to 4 cents per share, down from 11 cents a year earlier. Analysts polled by Reuters Estimates on average forecast 12 cents per share.

LaBranche cited "particularly unfavorable market conditions in January as well as lower volatility and increased program trading throughout the quarter" for its forecast.

Specialists such as LaBranche make a market in some listed stocks by buying and selling shares on the NYSE floor. They rely on price volatility and high volume to boost earnings.

Some market participants worry that the role of specialists may be reduced as the Big Board restructures its trading model to accommodate more electronic execution.

But in January LaBranche's chief executive, Michael LaBranche, said specialists "will still be an important piece of the puzzle because they will still be providing liquidity."

The NYSE on Thursday named Michael LaBranche to its Board of Executives, which makes decisions about the exchange's business model.

In early trading, LaBranche shares were down $1.01 to $8.85 after earlier falling as low as $8.65.