"earnings would have been $ 270 million"...
"100% revenue growth in the year ahead, and 200% in the next 2 years"...
E-Trade Sees Earnings Drag Lessening
SAN FRANCISCO (Reuters) - E-Trade Group Inc. (NasdaqNM:EGRP - news), the leading independent online broker, said on Wednesday it expects marketing costs to eat up a significantly smaller share of its revenue in the year ahead, helping it emerge from two years of large financial losses.
The company attained profitability nearly two years ago but then launched a massive marketing campaign that has wiped out its profits ever since.
In the year ahead though, the earnings drag is expected to ease. Marketing costs will drop to between 25 percent and 28 percent of total revenue in 2001, said Chief Financial Officer Len Purkis, down from ``the mid-30s'' at present.
The company told a group of investors at the Chase H & Q Technology Conference in San Francisco that marketing in the year ahead would be aimed, increasingly, at its banking division, built from Telebanc, acquired last year, and its newly acquired network of 8,800 automated teller machines. E-Trade will also push marketing efforts aimed at its fast-growing international divisions, Purkis said.
Purkis said previous image-building campaigns in the national media have created high name recognition for E-Trade, which he said scores a recall rating higher than its top four online brokerage competitors combined. He added that E-Trade is one of the best known e-commerce brands, ranking nearly as high as Yahoo Inc.(NasdaqNM:YHOO - news) and eBay Inc.(NasdaqNM:EBAY - news).
But the brand-building effort came at a high cost. While E-Trade reached a break-even level on its operations in March 2000, its earnings without marketing costs would have been $270 million, said Purkis. The earnings before marketing costs for the first six months exceeded the amount earned in the entire year prior, he added.
Purkis cited analysts expectations that show E-Trade will grow at better than 100 percent in revenue in the year ahead, and by 200 percent in the next two years. But he made no new earnings or revenue forecasts to the group. Banking and international revenue will begin to make up a much larger share of the total, Purkis said. |
