E*Trade Soars As It Posts Results That Exceed Views
Frenzied securities trading tied to the recent, robust stock market, as well as a surge in new-customer accounts, helped online broker E*Trade Group Inc. post a narrower-than-expected loss for its fiscal first quarter ended Dec. 31.</br></br>And even though analysts expect E*Trade to continue to lose money well into this year, shares of the Palo Alto, Calif., company leapt on the news: In Nasdaq Stock Market trading, E*Trade soared $20.875, or nearly 31%, to $88.50, a new 52-week high. E*Trade, which analysts say is trading like an Internet stock instead of a financial-services company, has seen its shares skyrocket 217% during the last three weeks.</br></br>E*Trade said it had a loss of $13.2 million, or 23 cents a diluted share, compared with profit of $5.1 million, or 12 cents a share, for last year's fiscal first quarter. The Wall Street consensus estimate was for a first-quarter loss of 30 cents a share.</br></br>Core transaction revenues, mainly stock commissions, increased 60% from last year and 40% from the last, sequential quarter as investors clamored for hot Internet stocks and other technology issues. "It's existing customers trading more . . . coupled with new customers coming online faster," E*Trade Chief Executive Christos Cotsakos said.</br></br>But the flurry of trades couldn't make up for the $41 million E*Trade poured into marketing to promote its new Web site, analysts said. E*Trade, which is spending heavily to compete with scores of other low-priced Internet trading houses, could devote a staggering $50 million to $60 million to marketing this quarter, said Bill Burnham, who follows the company for Credit Suisse First Boston Corp.