E*Trade Reports Steep Q4 Loss
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Online broker E*Trade Group Inc. reported a higher than expected fiscal fourth-quarter loss because of increased expenses to acquire new customers and large investments in technology.
E*Trade lost $15.7 million, or 33 cents a share, in its fiscal fourth quarter compared to a profit of $5.9 million, or 15 cents a diluted share, in the quarter a year ago. Revenues grew 32 percent to $68.7 million from $52 million in 1997.
Those results include an after-tax charge of $9.5 million, or 20 cents a share, to cover previously-announced acquisitions and costs associated with marketing alliances with Yahoo! Inc. and America Online Inc. Excluding that charge, the company lost 13 cents a share. That's in line with analysts, who according to First Call Research Corp., were expecting a 14-cent loss. First Call's estimates exclude one-time gains and charges.
For the year, E*Trade lost $1.3 million, or 3 cents a diluted share, compared to a profit of $15 million, or 42 cents a diluted share, a year ago. Revenues in 1998 grew to $245.2 million up from $156.4 million in fiscal 1997.
Christos Cotsakos, E*Trade's president and chief executive officer, said although continuing technology investments are expected to result in continued losses over the next several quarters, the money spent should enhance shareholder value over the long term.
"The company made the strategic decision to increase its investments in marketing and technology at the end of last quarter with the objective of better positioning itself as one of the leading Internet financial service brands of the 21st Century," he said.