E-Trade plays up $1 billion war chest
By Thom Calandra , CBS MarketWatch
Last Update: 2:19 PM ET Jun 9, 1999 Net Stocks
Renegade Reports
SAN FRANCISCO (CBS.MW) -- E-Trade Group (EGRP: news, msgs) CFO Len Purkis told a group of 125 fund managers and analysts that the electronic broker's Web site is reaching more unique visitors than the sites of Charles Schwab (SCH: news, msgs) and Ameritrade (AMTD: news, msgs) combined.
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Updated:
6/9/99 2:35:52 PM ET
The company, which opened its 1 millionth account in April, says it will use a "$1 billion war chest" to develop new products, build a 24-hour "transactional engine" and buy financial service companies, Purkis told a Putnam, Lovell, de Guardiola & Thornton conference on e-brokers in San Francisco Wednesday. "The strength of our balance sheet (no debt) is a competitive advantage," said Purkis, formerly CFO of Iomega (IOM: news, msgs).
E-Trade last week said it would pay $1.8 billion of its own stock to buy Telebanc Financial (TBFC: news, msgs). Purchase of the Internet bank saves E-Trade as much as 18 months of regulatory approvals and team building, Purkis said. E-Trade, which had $21 billion under management as of March 31, is trying to diversify revenues. The merger will give E-Trade greater growth via asset-based banking fees such as cash management accounts, he said. "Asset growth is an area of focus for the company," he said.
As for the technology breakdowns at E-Trade-s web site for stock traders, Purkis said it now has three technology service centers running: in Atlanta, Palo Alto, Calif., and Rancho Cordova, Calif. Drivers for growth after 27 straight quarters of revenue growth? Purkis pointed to 24-hour trading of stocks later this year. The company owns 25 percent of electronic communications network Archipelago with several other investors. E-Trade also owns a stake in investment banker Sandy Robertson's www.eoffering.com, which offers 50 percent of all the IPOs it underwrites to E-Trade customers. On Wednesday, e-offering opened its indication book for the first time for secondary shares of Web lender First Sierra. Purkis also said E-Trade's partner Web-trading sites in Britain and Japan will open later this year. The financial press was not permitted into a breakout session Purkis held Wednesday with fund managers. |
