E-Trade: In spite of losses, investors like turnaround plan

Posted Jan 25th 2008 10:30AM by Zack Miller
Filed under: Earnings Reports, TD AmeriTrade Holding (AMTD)

E*Trade (NASDAQ: ETFC) yesterday reported earnings that were received well by investors. E*Trade pretty much kitchen-sinked it and reported an almost $2 billion loss but revealed details about a long-awaited turnaround plan.

E*Trade has been plagued by significant losses due to its exposure to low quality mortgages from E*Trade's banking unit. The losses spiraled into customer defections and a management shake-up which lead to this new turnaround plan.

Most of the loss reported this quarter came from sales of mortgage-related securities that lost a lot of value last year. Things had gotten so bad last November that concerns arose that E*Trade was in danger of insolvency. Hedge-fund giant Citadel invested $2.55 billion in E*Trade and bought its $3 billion asset-backed securities portfolio for a knockdown price of $800 million.

I recently wrote about E*Trade vis-a-vis Ameritrade. Now, it's E*Trade's turn.

Other salient issues surrounding the turnaround plans involve the new CEO, shoring up the balance sheet and Ameritrade's outages and effect on E*Trade.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Tags: ameritrade, amtd, broker, e-trade, etfc, inthenews