Omaha, Neb.-based online brokerage Ameritrade, which just
agreed to shell out about $1.29 billion to acquire Datek Online Holdings,
squeaked in with a small second-quarter profit.
The company today was
touting its ability “to continue to manage for profitability despite market
conditions.”
Net income came in at $1.9 million or 1 cent a share, compared to a loss of
$54.2 million or 30 cents a share in the year-ago period. Net revenues came
in at $106.7 million, compared to $119 million a year earlier. Analysts on
average had been expecting earnings of 2 cents a share.
Indicating that the Internet recession is continuing despite whatever some
economists might be saying, Ameritrade said that average trades per day were
89,129, compared to 113,164 in the same period a year earlier.
So how did they make a profit? Cost-cutting. The company slashed its
marketing spending by nearly half, extending an ongoing drive to reduce
expenditures. Also on the good news side, 76,000 new accounts were opened at
an average cost per account of
$294, bringing total core brokerage accounts to 1,877,000, an increase of 27
percent from a year ago.
“Even though trading levels are still down, we have clearly shown that we are
effectively managing the factors within our control in order to maintain one
of the best operating margins in the industry,” said Joe Moglia, chief
executive officer of Ameritrade.
On the Datek deal, Moglia said that “we are … uniting two firms with the
fastest
growing account bases, lowest cost operations and highest operating margins
among our peer group.”
But clearly it’s not going to be a walk in the park. The company said it
expects to earn between 2 to 5 cents a share in the third and fourth
quarters, and between 13 to 27 cents a share for all of 2003. Analysts had
been expecting earnings of 6 cents a share in the third quarter, and 33 cents
for 2003.