From CNBC:
E*TRADE 3Q Results Are Mixed
cnbc.com
From Reuters:
dailynews.yahoo.com
Wednesday July 19 6:44 PM ET
E-Trade Swings Back to Profit in Third Quarter
By Greg Cresci
NEW YORK (Reuters) - E-Trade Group Inc. (NasdaqNM:EGRP - news)
on Wednesday said it swung back to profit in the fiscal third quarter, because
the No. 2 U.S. Internet brokerage put the brakes on its advertising budget
and recorded investment gains.
The Menlo Park, Calif.-based company, which has nearly three million
customers, reported a net profit of $5.7 million, or 2 cents per diluted share,
for the fiscal third quarter ended June 30. That compared with a reported net
loss of $23.7 million, or a loss of 9 cents per share, in the same quarter last
year. Net revenues rose 77 percent to $330 million, E-Trade said.
Excluding investment gains and other items, the broker registered a profit of
$500,000, or zero cents per share. The results beat Wall Street's lowered
expectations calling for E-Trade to lose a penny per share, according to
market research firm First Call/Thomson Financial. Analysts in recent months
had cut their profit forecasts for E-Trade because the Nasdaq stock market
and stock trading volumes slumped more than 10 percent in the quarter.
In trading on the Nasdaq Wednesday, E-Trade shares finished down 3/16 at
17-3/4. The stock had risen 9 percent since the beginning of the month but is
still well off its all-time high of 72-1/4, set in April 1999.
The recent Nasdaq slump caused E-Trade to scale back its advertising
budget along with others in the industry. E-Trade cut its advertising budget
about 35 percent from the second quarter to $115 million, but still spent
more on its media blitz than it did in the comparable period last year.
The online broker said it attracted 330,000 new brokerage accounts this
period, down slightly from 344,000 customer accounts last year and down
sharply from 603,000 in its second quarter this year.
Affecting the company's results was a drop in online trading volumes during
the quarter, which analysts estimate fell about 20 percent from runaway first
calendar quarter levels, in which investors funneled a record 1.4 million trades
a day through the Internet.
Across the industry, online trading volumes fell to about 1.1 million per day in
the most recent quarter, analysts estimate. But the reduced level still
represents a healthy 48 percent gain over the 1999 second-quarter average
daily volume of about 565,000 trades per day.
E-Trade's competitors, such as No. 1 U.S. Internet broker Charles Schwab
Corp. (NYSE:SCH - news) and DLJdirect (NYSE:DIR - news), a smaller
online broker, also reported quarterly results this week, showing a similar
pullback from the bumper first quarter.
Schwab met analysts' estimates with its second-quarter operating income of
$198.8 million, or 14 cents per share, while DLJdirect missed estimates and
swung into the red, registering a second-quarter net loss of $6.6 million, or a
loss of 6 cents per share.
E-Trade processed an average of 169,000 customer stock trades per day in
the quarter, up from about 81,000 a day last year but down from 229,000 a
day last quarter. Total customer assets jumped to $60.7 billion from $27.4
billion, E-Trade said.
The company booked about $24 million in gains from the sales of unspecified
investments, more than double its gain from those sales last quarter and six
times higher than the year-ago figure.
``I thought the results were very strong,'' said Richard Zandi, an analyst with
investment bank Donaldson, Lufkin & Jenrette. ``They did a very good job
of continuing to pursue their global vision in a turbulent market environment,
showing that they had good gross margins and control on the expenses.''
E-Trade has recently been moving to expand its operations beyond its
bread-and-butter business of online trading. It bought a network of automatic
teller machines (ATMs) and paid $1.1 billion for Telebanc Financial Corp.
earlier this year.
The company said it will soon begin installing its ATMs at business facilities of
computer software firm Oracle Corp. (NasdaqNM:ORCL - news) in an
effort to provide financial services to that company's worldwide work force of
more than 50,000. |
