posted 07-19-2000 07:01 PM         

Company Name (Ticker): reported, expected, same q last year

posted 07-08-2000 10:52 AM         

"In fact, most online-brokerage stocks have been languishing since the dead of winter. Except for a brief burst of upward momentum in March, they've been some of the market's worst performers of the past six months. Five of the biggest online-brokerage stocks are now trading an average of 52% off their 52-week highs. Shares of E*Trade Group (EGRP) and Ameritrade Holding (AMTD), two of the sector's biggest players, are selling just a few dollars above their 52-week lows. Even a relatively strong performer like Charles Schwab (SCH), the nation's second-largest online broker, is trading nearly 22% off its high.

Don't look for much of a bounce when the industry releases second-quarter earnings figures in the coming weeks. Soon after the big tech swoon, most analysts quickly pared back their estimates for the online firms and some even reduced their price targets. At best, most analysts are looking for online brokers like E*Trade and Ameritrade — which spend heavily on advertising and marketing — to report small losses or break even. Unfortunately for the e-brokers, those diminished expectations come on the heels of a first quarter in which most online firms beat their earnings expectations.

Will the hoped-for autumn rally save the sector? It's difficult to say. Some argue that the challenge for the online brokers is to demonstrate a track record of profitability — something that's been elusive because of the huge gobs of money they spend on marketing and advertising. "For E*Trade and Ameritrade, some people don't quite believe the profitability story yet," says Gregory Smith, an online-brokerage analyst at Chase H&Q. "If they can break even this quarter, it would be a minor victory. But the Street wants to see consistent profitability."

One way to get there is by controlling a greater portion of customers' assets. When investors deposit more of their money with a brokerage firm, they're likely to trade stocks more often and invest in a broader array of financial products — like IRAs, mutual funds and bonds. Except for Charles Schwab, the most diversified of the online brokers, online firms have had a tough time convincing investors to deposit most of their assets with them. E*Trade and Ameritrade are second homes for most of their clients — places they turn to make a quick trade or two — while the big money resides elsewhere. The average Schwab customer, for instance, has just over $112,000 in his or her account, compared to $39,000 for the typical Ameritrade customer and $25,000 for the average E*Trade investor.

William Wong, an online-brokerage analyst with Josephthal & Co., says investors are looking for proof that E*Trade and Ameritrade can attract more assets. That's the main reason E*Trade has moved aggressively into online banking and other financial services, he says.

Others say a real spike in online-brokerage stocks won't come until there's some badly needed consolidation in the industry. Among other things, a little lessening of the competitive heat would allow firms to cut their massive advertising budgets. Right now, 10 online brokerages — out of the estimated 160 firms that offer some type of online stock trading — control more than 90% of the online-trading business. But most of those 10 firms spend heavily on advertising because the competition among them to sign up new customers is so fierce.

Why the ad blitz? As expensive as advertising is, it's far cheaper to get customers through marketing than through the outright acquisition of a competitor. On average, online firms spend between $200 and $400 on advertising to attract one new customer. By contrast, analysts say, based on the market capitalization of most online firms, it costs roughly $2,400 to gain a customer through a merger. Until there's a narrowing of that huge gap, most say consolidation won't occur, even though it's generally viewed as inevitable.

posted 06-16-2000 12:22 PM         

I wonder if what is happening to the rest of the financial sector is destined to happen to EGRP. Have you been following the stock the past couple of days? Banks all over the place are being downgraded and are warning about earnings--with the trading volume lowering and the ipo market dead. now, EGRP may not be susceptible to the slowdown in IPOs, but with the rest of the problems facing the financials, I think they might be hit, and maybe this deal shows that they do expect the stock to struggle.

quote:

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Originally posted by dude:
I'm surprised they're doing the whole acquisition with stock instead of a mix of stock and cash, with EGRP near its 52-week lows. Does the company's management think the stock has further to fall?

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posted 04-27-2000 04:22 PM         

There are lots of misconceptions regarding the online industry, and I think that people will find the results from my thesis interesting. I'm hoping to be able to validate some of the results that have been obtained from a number of interviews that I have conducted over the last couple of months with both traditional and online brokerages, financial consultancies, regulators and academics. The survey is located at:
http://www.btaconsulting.co.uk/frames/framsurvey.htm

I would really appreciate it if you would help me out by filling in my survey; it takes less than 3 mins to complete. If you don’t want to leave your name I don’t care, but please leave your e-mail address because it’s the only way for me to establish that someone filled in my questionnaire. All information will be kept confidential, and the survey results are for academic purposes. The results of this survey together with my thesis will be published online at www.city.ac.uk/~az136/the21stcenturybrokerage on June 25 2000. Thank you for your time.

Regards