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Ameritrade Scrambling

Omaha, Neb.-based Ameritrade Holding Corp., its bottom line suffering from a rapid decline in online trading thanks to the bear market for tech stocks, is set to announce a restructuring on Wednesday, and some job cuts would appear likely.

Apparently a widely reported attempt to be acquired by Canadian Imperial Bank of Commerce (CIBC) has fallen through, and Ameritrade is proceeding with what has come to be business as usual for so many Internet-oriented firms as the NASDAQ market tanked.

And it certainly is not the only online brokerage that is being forced to scramble. At least one recent article on financial site Fool.com was headlined: "Is Online Trading Dead?"

Ameritrade no doubt would answer that by saying no, but it's clear the landscape has changed. Even the leading online brokerage, Charles Schwab turned in another disappointing monthly report for May, when it saw average daily trading volume drop 11 percent from last May and 7 percent from April.

Last March Ameritrade named a new CEO, Joseph Moglia, who had been a senior vice president in Merrill Lynch & Co. Inc.'s private client group.

And just last week the company named a new chief strategy officer and wasn't shy about saying that the move was part of a restructuring plan meant to improve results. Phylis Esposito, an outside management consultant, will be responsible for mergers and acquisitions, strategic alliances, business development and investor relations, the company said, adding that it is proceeding with its client-focused restructuring.

The company has been struggling financially for several quarters. For the 26 weeks ended March 30, revenues fell 13 percent to $282.3 million. Net loss totaled $77.2 million, or 30 cents a share, up from $18.5 million.

The company's stock closed at $6.54 on Monday, well down from its 52-week high of $21.50. The 52-week low is $3.75. It was down 30 cents in early trading today.

In a May 14 10-Q filing with the Securities and Exchange Commission, Ameritrade said that its second 2001 fiscal quarter was adversely affected "by a decline in commissions and clearing fees of 39 percent to $76.4 million from $126 million in the same period a year earlier."

The decline was primarily attributable to a decrease in the number of securities transactions processed, as average trades per day decreased 24 percent to 113,000 in the second quarter of fiscal 2001 from 149,000 a year earlier.

Clients averaged approximately five trades per account during the second quarter of fiscal 2001, compared to more than 11 trades per account during the second quarter of fiscal 2000.

At the time, the company said in the report that it anticipates "that our available cash resources and credit facilities will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months."

The company said in its report that it has a revolving credit agreement with a bank group that permits borrowings up to $60 million through December 31, 2001.

Analysts polled by Thomson First Call are expecting the company to cuts its loss for the third quarter, with a current mean estimate of a loss of 1 cent a share for Ameritrade's next reporting period.