Written in thank to S.I.
@Property Financial Oxymoron?:
E*Trade To Go Public
Online Brokerage has come to the forefront in recent months as perhaps the perfect mix of the Internet and financial services. At the same time, it is an excellent example of the threat that online financial services pose to cannibalize traditional systems. Electronic trading may push the brokers out of brokerage. Or this may be a showdown between the older houses as they get their online offerings off the ground, and the pioneering online start-ups such as E*Trade Securities. The company plans to have its IPO this month and the future of E*Trade may serve as the litmus test for the industry.
The companyÕs biggest draw is its offer of the lowest current commissions on trades. Commissions start at $14.95 for market orders up to 5,000 shares of New York or American stock exchange securities and $19.95 for NASDAQ stocks in unlimited quantities. Content providers include CNN Financial Network, Dead ManÕs Island, SEC EDGAR Database, HooverÕs, MIT Stock Charts and a Money and Investing online edition of the Wall Street Journal. E*Trade also receives kudos for its screen design which is easy to use and engaging. Service is accessible via the Web, direct dial, touch tone, America Online and CompuServe. E*Trade carries no long-term debt and has doubled in size for the past two years. Stock is rumored to be offered at around $13 per share.
E*Trade is a subsidiary of Trade Plus, a electronic brokerage service bureau designed for stockbrokers, that was launched by Bill Porter in 1984 with a $15,000 investment. E*Trade Securities was then launched in 1991 as the consumer product for individual investors and began taking trades in 1992. It now employs close to 200 people from its Palo Alto, CA headquarters. Bill Porter is a former physicist who holds 14 patents and was turned on to the benefits of online financial information in 1981, when he received his first electronic stock quotes from The Source, an early online service.
But despite E*TradeÕs skyrocket success, the company has been plagued with service complaints, bringing into serious question the companyÕs ability to handle increasing volume. The main complaints seem to be slowness and a brick wall customer service response--both of which lead in some cases to missed opportunities and losses. Some customers report: Waits of up to 2 months for account transfers (which should take 3 weeks) from other brokers during which time stocks are inaccessible; notices received for expired orders the day after an order was placed, with buy confirmations following several days later; fifteen to forty minute waits for telephone customer support; and shuffling of account complaints between company representatives. Some customers blame E*Trade for losses incurred because of these problems and a class action lawsuit is |
