e,
I think you'll like this.
multex.com
E*TRADE Gaining Momentum
Stephen Franco, senior research analyst, U.S. Bancorp Piper Jaffray
Interviewed by Mark Klimek
Stephen Franco has covered Internet companies since early 1994, first for The Yankee Group and later for Pacific Growth Equities. Currently he covers the e-commerce industry for U.S. Bancorp Piper Jaffray in San Francisco.
[THE INTERNET ANALYST] E*TRADE GROUP [EGRP] recently beat analysts' estimates for its second fiscal quarter. What drove the firm's strong results?
[Stephen Franco] E*TRADE did a great job generating new business. I expected to see 171,000 new accounts in the quarter, but the firm produced approximately 233,000. Another major factor was E*TRADE's customer acquisition costs, which I anticipated would be $304 per customer, but came in at only $283. Finally, trading was very heavy. The average customer traded 5.5 times in the quarter, up from 4.5 times in the previous quarter.
[TIA] How has the firm been able to post those types of numbers?
[SF] Destination E*Trade, the portal site that the company launched in September 1998, has gained a lot of momentum. The site allows Web users to set up portfolios of securities, track recent news about companies and access data such as stock charts. E*TRADE doesn't require that you become a customer to take advantage of these features, either.
Stephen Franco
Senior Research Analyst,
U.S. Bancorp Piper Jaffray
Industry Followed:
Electronic Commerce
Companies Followed:
AMERITRADE [AMTD]; CHECKFREE [CKFR]; COMPUTER LITERACY [CMPL]; E*TRADE [EGRP]; SECURITY FIRST TECHNOLOGIES [SONE]
[TIA] So E*TRADE hopes to attract lots of eyeballs through this site and turn those users into paying customers?
[SF] That's correct, and so far it's doing a great job.
[TIA] Beyond the positive news during the last quarter, why do you have a Strong Buy on E*TRADE?
[SF] E*TRADE was an early mover in the Internet brokerage industry and has helped define the space. It continues to push the envelope by developing great technology, improving its Web site and adding new services. E*TRADE customers can now apply for insurance and mortgages online. That's yet another area where E*TRADE continues to innovate.
[TIA] Do you worry about E*TRADE's ability to defend its market position against younger upstart companies?
[SF] I think that regional banks will enter the Internet brokerage business eventually and it's possible that E*TRADE will have to work hard to maintain its position then. But serious competition from an upstart? Forget it. E*TRADE has one million customers, $400 million in cash and spends hundreds of millions of dollars on marketing and technology every year.
[TIA] Any chance of E*TRADE ever taking the crown from the market leader, CHARLES SCHWAB (SCH)?
[SF] Probably not. But it's going to be a stronger and stronger number two player in the years ahead. |
