E*Trade CEO Christos Cotsakos is projecting revenues in excess of $1 billion (US$) for 2000, although the company’s first quarter profits were marginal.
The number two online brokerage, which lost $54.4 million in 1999, came through with $1.3 million in operating earnings, a breakeven point on a per share basis, for the quarter ending March 31st. Revenue, however, had more than doubled to $407 million from $162 million in the same quarter one year earlier. At that time, in 1999, the company showed an operating loss of $13.3 million.
Cotsakos attributes much of the optimism over the coming year’s expectations to the company’s decreasing dependency on commissions. “Actually, less than 46 percent of our revenue now comes from transactions, when three years ago it was well over 90 percent,” he said.
E*Trade’s Worldwide Growth
E*Trade’s moves toward diversification and globalization are also regarded as important contributing factors toward increasing growth. The company now operates in nine countries outside the U.S., and plans to add services in Germany, Hong Kong, Norway, Israel and Vietnam within the next six months.
Vietnam plans to open a pilot stock market this year, and according to Cotsakos, E*Trade has every intention of getting in on the ground floor. “We think it’s a great place to get a foothold and establish our electronic trading platform, which will have cross-cultural as well as cross-trade in currencies,” he said. Ultimately, Cotsakos hopes to have his company fully operational in 30 countries.
Meanwhile, as reported in the E-Commerce Times, E*Trade continues to solidify its presence in the U.S., most recently with the acquisition of 8,500 ATM machines that will provide consumers with sidewalk service as well as Internet use. The company recently made a foray into online consumer banking by merging with pure-play Internet bank Tele-bank, and changing its name to E*Trade Bank.
Analysts Impressed, Investors Cool
Industry analysts are increasingly optimistic about E*Trade’s potential in the e-commerce marketplace. Earlier this month Gregory Smith, an analyst with Chase Hambrecht & Quist, said the company’s stock remains his favorite name among online brokers, partly because of the integration of banking and brokerage services.
At about the same time, analyst Bryan Keane of Prudential Securities said the company’s aggressive efforts to diversify have caused him to predict sustainable revenue growth of 50 percent over the next few years.
Individual investors are still taking a wait and see attitude. Nervous over the recent volatility of technology stocks and fearful of a return to a bear market, investors are not in any rush to embrace E*Trade, despite better than expected results last quarter.
Yesterday, E*Trade shares closed at about $20. This year’s high for the company was $63.