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.
During the quarter, E*Trade added 85,000 new accounts to reach 544,000 at
the end of September. That’s more than double the 225,000 last year and 19
percent higher than the 459,000 subscribers at the end of June.
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.