ecommerceman,
I would like to throw a couple of numbers out, all estimates of course(won't talk about the stock price though)
- E*Trade and Schwab continue to increase accounts at an alarming rate - alarming for the mainline brokers(legacy) and those worried about customer service degrading). Based on the last Conference call, a majority
of these accounts are coming from those that hold accounts from the legacy brokers. And no, the majority of them are not transferring their entire accounts but are starting online accounts with a small amount compared to their legacy account.
- As time progresses, this small account will increase resulting in less assets going to their legacy account and more going into the online one. Positive for E*Trade, Negative for Merill among others. This won't decrease account size or assets at Merill but it will limit their potential asset/account growth in our increasingly network centric environment. Potential growth for E*Trade is what keeps me as a holder of the stock.(e.g. in 1992, Schwab had 1B cap and today they sometimes go over 50B and I believe we will see that with E*Trade in a few years also). Nothing E*Trade has done so far has led me to believe otherwise.
- E*Trade gets at least 25%, maybe even 30% of all new online accounts. I don't think that is contestable and drives the legacy brokers to try harder and harder to catch up. Little folks like JBOH, NDB, SIEB, etc. and even AMTD have been left behind and can continue to operate
but will never compete with EGRP. They didn't have the vision nor did anyone else to do what E*Trade is doing. As CC said, if E*Trade was even going to be this successful, would the Merills of the world have allowed it to survive? They would have bought it out back before it IPOd or shortly
after or set up their own online company totally seperate from their actual ops and E*Trade would be a fading memory.
- A troublesome item though is the fact that AMTD got more with less in their account acquistions last month. This probably tells me that E*Trade has gone past the point of diminishing returns regarding
advertising/marketing --> accounts.
- hence, this quarter and next, advertising has been scaled down. Will they get 603,000 accounts? Maybe not, but their cost per account should go down. Profits????
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