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Non-Tech : E*Trade (NYSE:ET) -- Ignore unavailable to you. Want to Upgrade?

To: pcyhuang who wrote (3040)	6/14/1998 6:55:00 PM
From: TokyoMex	Read Replies (2) \| Respond to of 13953

From my friend Jim Cory at www.thestreet.com 19 3/4 on Friday was god sent ,, There's a Silver Lining In the Cloud Over E-Trade By Cory Johnson The badly beaten shareholders of E-Trade might feel like they're out of the race. But it ain't over yet, and a dark horse might just give the company a second wind. The Palo Alto, Calif.-based online brokerage is going full tilt to establish a powerful market share in the Internet stock-trading arena. But as its marketing and build-out expenses have grown, its share prices have stumbled badly. Now, some on the Street are starting to realize that potential competitors will be slowed by an unexpected weight - the Year 2000 problem. "Bears on the Street say that E-Trade is toast," says hedge-fund manager Howard Love of Love Capital Management. "They say that anytime the wire houses - Smith Barney, PaineWebber, Merrill Lynch, AG Edwards - want to, they can crush these guys." But E-Trade has fewer legacy computing systems than its giant rivals and thus little Y2K risk. When the calendar turns from 1999 to 2000, the computer systems of giant financial institutions will go on the fritz unless the companies execute a multimillion-dollar fix. But with fewer than 400 work days left before the new millennium, the last thing IT managers want to do is retool their trading systems to run on the Internet. On paper, a merger between Citibank and Smith Barney parent Travelers would make for a natural Internet brokerage. No way, says Citibank's Year 2000 project head, Jim Devlin. "We've got 70 percent of our developers around the world working on the Year 2000 problem," he says. "We have about 500 million lines of code to look at, and that's the number one priority for this organization. . We can't take on any other projects." Indeed, filings with the Securities and Exchange Commission reveal that Citibank/Travelers is planning to spend at least $800 million on Y2K remediation. That kind of problem creates a whole new barrier to entry in the Internet trading market, and E-Trade CEO Christos Cotsakos knows it. "Our entire plan is geared toward building right now, not two years from now," he says. "We don't have a five-year plan; we don't have a two-year plan; we have a 90-day plan." Last September, E-Trade's stock ran up 46 percent, capped off by a presentation by Cotsakos at the Montgomery Securities Growth Conference. Since then, the stock has tanked 57 percent. Now some on Wall Street see a bottom to E-Trade's slide. "I was short [Internet brokerages]," says Love. "But I covered this a few days ago. The stocks have been looking a lot stronger and I've lost the conviction that things are going to get worse --------------------