mike.
for your DD archive, here's the transcript of pasternak's interview on CNBC (apr 21). you can also catch the aud & vid replays at the url.
-chris.
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CNBC - POWER LUNCH
KNIGHT/TRIMARK (NITE) PRESIDENT AND CEO KENNETH PASTERNAK
APRIL 21, 1999
mktnews.nasdaq.com\\www\nasdaq\news\msnbc\1999\4\21\NASDAQ_1310_20578.htm&usymbol=NITE&logo=True&companyname=Knight%2FTrimark+Group%2C+Inc%2E
SUMMARY: Knight/Trimark acts as a "whole saler" by executing trades for online brokers. Pasternak is making plans to handle extended trading hours.
Bill: Now let's talk earnings. Knight/Trimark, which processes much of the trades investors funnel through on-line brokerages, said yesterday it more than quadrupled profits for its first quarter. The company earned 67 cents a share in the first quarter, up from 20 cents a year ago.
These results far surpassing Wall Street expectations of 39 cents a share. Revenues were up 188% to $183 million, and net income was up a whopping 450% to $37 million. The firm also announced a 2-for-1 stock split. Night's stock price has soared almost 20-fold over the past six months, driven by investors' love affair with almost any internet-related company. Here to tell us more is its president and CEO, Ken Pasternak. Thanks for joining us.
Well, thanks for having me.
Bill: That was what they call a blowout quarter. I guess you did a lousy job of guiding Wall Street, right?
I think the so-called experts on Wall Street have consistently underestimated the momentum of on-line investors.
Bill: You know, we had the CEO of E*TRADE here yesterday.
And I said where are all these investors coming from?
Everybody's talking about increasing their customer accounts. Nobody's saying that their customer accounts have gone down. So, you're getting new investors. Where are they coming from, do you think?
Well, I think the new investors are coming from where people typically had pools of money and were not active around those pools are taking a slice of that money out and putting them into an on-line account and trying to add value through more active trading methodologies.
Bill: Can that last though? Are these the people who come to stay at the party?
Bill, in fact, to show you how fast the momentum is, and sometimes we even underestimate how strong the trend is. We saw increased momentum or we're seeing increased momentum in Q2. In fact, on April 14th, we executed north of 500,000 transactions in a single day of the $2.3 million that were done in the United States.
Bill: Point well taken. Momentum is still there, but can it last?
Well, if you look at some of the numbers that are out there that talk about 25 million on-line accounts in two years, and you see the kind of credibility to those numbers, we think we're very much in the embryonic stage of that.
Bill: Many of your customers are also your shareholders, sort of a co-op situation here, huh? I mean, Ameritrade and Merrill.
That's true.
Bill: E*TRADE though sold their position in the first quarter.
E*TRADE sold a small portion of their position. Keep in mind that E*TRADE, as many investors during periods of time, including myself, will avail ourselves of slight amounts of liquidity. We still have a lot of skin in the game, including E*TRADE.
Bill: Boy, that is for sure. The electronic trading, the after-hours, trading does that just benefit you or is that competition for you at some point as well?
Well, we see that as being very synergistic with what happens during a normal or historical trading hours, the 9:30 to 4:00. And we think the more platforms you provide for people who trade, the more opportunities I think you'll have for investors who trade with different kinds of time frame strategies. And we see that evolving eventually to a 24-by-7 type of scenario.
Bill: NASDAQ says by this summer they'll add to the number of hours, into the evening hours. The New York Stock Exchange has made that clear. Are you preparing for that?
Do you increase your infrastructure? What are you doing?
We're doing a platform that will be able to enable our customers to access all these different venues, depending on what type of situations the customers needs are. We see ourselves trading 24 by 7 again, around the clock.
Bill: Going out and getting new customers? I mean, how do you do that? I would imagine that the relationships that brokerage houses have with a company like yours is all alright already pretty well set, and it would be pretty tough for you to get another customer, a big brokerage house, away from their current clearinghouse.
Keep in mind, we're a point of execution similar to an exchange. Our customers are broker dealers, not the actual retail investor. And we think we're still the beneficiary of a majority of the on-line transactions.
Bill: That's my point. Is your greatest growth just based on the growth of those broker/dealers that you deal with?
The brokerage houses you deal with or can you go out and get new customers, another Merrill Lynch, another PaineWebber to continue growth?
You might find an interesting statistic is that while we started or our birth was in line with the on-line brokers, such as E*TRADE and Ameritrade.
Bill: Right.
In fact, the on-line investors, less than 50% of our order flow today and, in fact, the group as a whole is less than half order flow today. We have migrated to be a destination for both off-line and institutional order flow of quite significant proportions.
Bill: Well, the growth certainly is the there right now.
Continued success. Thanks for joining us.
Thank you very much.
Bill: Knight/Trimark President and CEO, Ken Pasternak. |
