NEW YORK -- Online brokerage E*Trade Group Inc. (NYSE:ET - news) said its third-quarter operating profit rose 29 percent, beating Wall Street estimates, as cost controls and non-stock operations helped offset the effect of sharply lower customer share trading.
According to a Reuters report, the Menlo Park, Calif.-based company reported net income from ongoing operations of $9.3 million, or 3 cents a share for the three months ended Sept. 30. That compared with operating earnings of $7.2 million, or 2 cents a share, in the year-earlier period.
Analysts had been expecting E*Trade to report a loss of one cent to a profit of one cent a share for the quarter excluding goodwill, with a consensus expectation of nil per share, according to research firm Thomson Financial/First Call.
The operating profit -- the fifth straight quarter in which E*Trade has reported positive earnings -- excludes $227 million in restructuring charges and other one-time charges. When those special charges are factored in, E*Trade lost $259 million for the quarter, or 77 cents a share, which compares with a profit of $48 million, or 15 cents a share, in the year-ago period.
The company slashed its marketing expenses by 45 percent from a year-ago to $50.3 million. Technology and administrative costs were also cut. E*Trade, which currently employs about 3,770 people, plans to reduce its work force by about 7 percent by year-end, executives said on a conference call.
E*Trade, which has nearly 4 million online brokerage customers, said average daily trades fell 39 percent from the year-ago period. But the firm benefited from other services. The company registered a 51 percent jump in active banking accounts and said total bank assets jumped 46 percent to $13.1 billion.
E*Trade Chairman Christos Cotsakos said that the company opened six new E*Trade Zone stores in Target stores across the U.S. during the quarter, and will open 12 more by the end of this year and another 24 during 2002. Target has also agreed to host 1,000 E*Trade ATMs over the next 18 months.
"Our alliance with Target helps us build our physical presence efficiently," Cotsakos said. "We can build 16 Target Zones for the cost of one full-service bank branch."
