TD AMERITRADE Holding Corporation (NASDAQ: AMTD) said Tuesday its metrics -- including client trades per day and total client assets -- for May have improved, and that third quarter earnings are expected to be at or near the high end of the prior guidance range. Shares were up nearly 2% in after-hours trading.
Microsoft Corp. (NASDAQ: MSFT) said Wednesday it has acquired Navic Networks, specializing in emerging forms of television advertising technology, to optimize the delivery and placement of TV advertising. Terms of the deal were not disclosed. Meanwhile, China has begun an anti-monopoly investigation into Microsoft with possibility that lawsuits from local companies could follow.
According toThe Wall Street Journal, Reliance ADA of India might provide high level executives at DreamWorks, including Steven Spielberg, with financing, enabling the media company to part ways with Viacom (NYSE: VIA)'s Paramount Pictures.
TD Ameritrade Holding Corporation (NASDAQ: AMTD) reported earnings for its second fiscal quarter yesterday, and they were pretty decent for the most part -- some might have thought that investors were completely shunning the market because of all the volatility going on, but TD Ameritrade's results show that a broker can still make money in such a challenging climate.
Even so, overall revenues declined 3% to $623 million. While transaction-based revenues also declined, it should be noted that average client trades per day did increase 23% to 312,000. That's an important measure when talking about brokers such as TD Ameritrade, or competitors such as E TRADE Financial Corporation (NASDAQ: ETFC) and The Charles Schwab Corporation (NASDAQ: SCHW). Earnings per share really shined, rising 35% to $0.31 per diluted share.
TD Ameritrade is sticking to its earnings guidance of a "midpoint forecast of $1.32." Of course, I'd like to see raised guidance, but a reaffirmation is certainly better than a reduction in guidance. Besides, I have to go back to the challenging climate concern -- if TD is happy to keep the forecast right now, then this is definitely positive. Investors would probably do well to at least investigate the brokers. When the economy snaps back, they should rally higher from these levels. TD Ameritrade, while not right up against a 52-week high, actually isn't that far from it, interestingly enough.
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
MOST NOTEWORTHY: Goldman Sachs, Lehman and TD AmeriTrade were today's noteworthy downgrades:
UBS downgraded Goldman Sachs (NYSE: GS) to Neutral from Buy. The firm believes liquidity problems and de-leveraging in the capital markets will get worst before they get better; UBS also downgraded Bank of New York (NYSE: BK), State Street (NYSE: STT) and Invesco (NYSE: IVZ) to Neutral from Buy.
Following Bear Stearns' (NYSE: BSC) downfall, UBS also downgraded Lehman Brothers (NYSE: LEH) to Neutral from Buy and said the company could be the "next on the list" for the confidence/liquidity crisis by some investors.
TD AmeriTrade (NASDAQ: AMTD) was downgraded to Neutral from buy at UBS and to Market Perform from Outperform at Friedman Billings. Friedman Billings downgraded TD Ameritrade citing slowing client activity as well as margin compression.
OTHER DOWNGRADES:
JP Morgan cut Portugal Telecom (NYSE: PT) to Underweight from Neutral.
Goldman downgraded Marathon Oil (NYSE: MRO) and Holly Corp (NYSE: HOC) to Neutral from Buy and removed Frontier Oil (NYSE: FTO) from its Conviction Buy List.
E*Trade (NASDAQ: ETFC) is naming its chairman, former JPMorgan (NYSE: JPM) vice-chairman Donald Layton, to be the company's new CEO.
The stock was trading up more than 5% on the news earlier, probably because of speculation of a possible sale. The Wall Street Journalreported [subscription required] that "E*Trade and Citadel have discussed the possibility of trying to find a buyer for the home-equity portfolio, which would lift a tremendous burden off E*Trade and could pave the way for a sale of the entire company, according to people familiar with the matter."
But Mr. Layton told the Journal that selling the home-equity portfolio is not an option right now.
I think investors should, as always, be extremely cautious about buying shares in the company on takeover speculation. E*Trade's woes -- and declining share price -- are hardly an unknown entity given its status as a poster child of subprime stupidity. The fact that Ameritrade (NASDAQ: AMTD) and other well-capitalized competitors, which had expressed interest in acquiring E*Trade before its precipitous decline in value aren't stepping up with an offer, tells me all I need to know: there's really no reason to think a deal is coming any time soon.
Shares of E*Trade (NASDAQ: ETFC) are up more than 8% on news that insiders and directors have acquired $1.9 million worth of stock in recent days. But investors should be cautious.
The buying was in all probability coordinated to send a message to investors -- and Wall Street is eating it up. But the reality is that $1.9 million is just not that much money in the context of the amount that the company top executives are paid.
The insider buying, in conjunction with the money E*Trade will spend on Super Bowl ads, looks like a pretty desperate and transparent effort by the company to convince investors and customers that the company is OK.
But think about it: if everything is so rosy, why isn't Ameritrade (NASDAQ: AMTD) jumping in with an offer to acquire the company, something it had previously contemplated doing at a much higher price?
E*Trade executives appear to be hoping that if they can convince people everything is peachy, it will be. But that's not a game you want to be playing.
Short sellers trading stocks listed on Nasdaq made big bets against cable and financial shares, according to data from January 15. The numbers compare to short interest in the same companies on December 15, 2007.
The short interest in cable company Charter Communications (NASDAQ: CHTR) moved up 4 million to 99.3 million. Charter's stock has fallen close to $1. It carries $19 billion in debt and there is a growing concern that operating profits will not cover interest. Controlling shareholder Paul Allen may have to put more debt into the company.
Short interest in Comcast (NASDAQ: CMCSA) rose almost 600,000 shares to 45.1 million. After hitting a record high last year, shares of the nation's largest cable company have fallen one-third on concerns that large telephone companies will take its TV and broadband subscribers with their new fiber-to-the-home products.
Short interest in E*Trade (NASDAQ: ETFC) moved up 9.9 million shares to 91.2 million. The market is obviously willing to bet that there are more problems with the company's balance sheet. Short interest in healthier rival TD Ameritrade (NASDAQ: AMTD) fell 5.1 million to 8.6 million shares. The market is not shorting the discount brokerage industry, just the weakest company in the group.
Douglas A. McIntyre is an editor at 247wallst.com.
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.
Professional investors like to use conference call transcripts as a valuable tool in their research toolbox. These are transcribed versions of an actual conference call, usually held publicly over the phone. Instead of listening to the full call, investors can get their hands on these things and read them at their leisure. They're generally full of information asked by both analysts and professional investors.
Okay, and then, just finally, so far in January, the asset intake from E*Trade, is that still running at elevated levels versus historical trends and can you share any TFA data there versus history?
Joe Moglia, CEO, Ameritrade
I think again, for you to have clarity, I think it is appropriate for me to share that, we are not going to give specific numbers, but the numbers that we continue to see with regards to the inflow from them is significantly higher than anything we have ever seen historically.
TD Ameritrade Corp. (NASDAQ: AMTD) saw a Q1 net income growth to the tune of 65% [subscription required] as more of its retail customers placed trades in the turbulent market during the final quarter of 2007. That's not all, though: the company said 2008 earnings would be better than its previous outlook.
In perfect market fashion, the company's shares rose slightly and then tanked over 4%. AMTD shares stand at $18.08 as of 12:27 p.m., down 4.79% from yesterday's close. This, after the company reported a 65% net income rise in its Q1's fiscal period, with $240.8 million in net income or $0.40 per share and shares indicated up over 4% in premarket trading.
For the trading company's Q1 period, it reported an average of 321,736 client trades per day -- up 35% from the year-ago quarterly period. Seeing as though the final three months of 2007 saw some wild swings in tech stocks (among other sectors), TD Ameritrade's customers were on an apparent trading frenzy of sorts.
However, the company reported that client assets fell 0.8% to $300.4 billion for the quarter ended December 31st. The total includes $47 billion in cash and money market funds within all consumer client accounts. All those consumer trades, all those assets, and a brighter 2008 outlook -- and AMTD shares go down as a result. You have to love the market's interpretation of good results.
Boeing (NYSE: BA) was upgraded by Bernstein from Market Perform to Outperform. However, Boeing said this morning, PrivatAir has ordered an additional 787-model airplane for $162 million.
Adobe Systems (NASDAQ: ADBE) and McAfee (NYSE: MFE) were downgraded from Buy to Neutral by UBS.
Harley Davidson (NYSE: HOG) was downgraded by Citigroup from Hold to Sell. Shares down over 4% in premarket trading.
Intel Corp. (NASDAQ: INTC) was downgraded by Charter Equity from Buy to Market Perform.
Oppenheimer downgraded JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) from Outperform to Perform.
Piper Jaffray downgraded Jones Soda (NASDAQ: JSDA) from Buy to Neutral. Shares down over 3% in premarket trading.
Friedman Billings, with its Outperform rating on Alcoa (NYSE: AA), lowered the aluminum maker's target price from $38 to $35.
Altria (NYSE: MO)'s target price was upped to $88 from $79 by Credit Suisse, which rates the stock Outperform.
TD Ameritrade Holding Corp. (NASDAQ: AMTD) reported a 65% rise in its fiscal first-quarter net income as trading activity increased and asset-based revenue continued to grow. The company reported $240.8 million net income, or 40 cents per share, beating estimates by a penny. AMTD shares are up 4% in premarket trading.
As investors throughout the world get ready to usher in 2008, here is a stock pick that looks like it will be a big winner.
TD Ameritrade (NASDAQ: AMTD), the online broker, looks like it will be the big winner in the E*Trade (NASDAQ: ETFC) fiasco. TD Ameritrade looks to pick up a whole bunch of accounts from the shamed online broker. In addition, after some clarity is shined on just how bad E*Trade's financial situation is, I would expect TD Ameritrade to swoop in and gobble up the retail brokerage business of E*Trade. They are sure to acquire it on the cheap, which makes TD Ameritrade all the more attractive.
With a PE under 19, and the stock trading just off the 52-week high, the stock has been hanging in during a period when the rest of the financials have gotten clobbered. Look for TD Ameritrade stock to be a strong performer in '08.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position in any stock mentioned as of 12/30/07.
The Wall Street Journalreports thatCitigroup (NYSE: C) and HSBC (NYSE: HBC) may sell units to raise capital. Citi has an auto loan unit and a piece of a credit card company in South America. However, with potential write-offs in the billions of dollars still expected in the fourth quarter, the sales of small units may not be enough.
It is more likely that if Citi is pressed for cash it may sell a large unit like Smith Barney. There are no public numbers on what the unit is worth, but the opeartion does have over 9.3 million clients and almost $1.3 trillion is assets. Giving that TD Ameritrade (NYSE: AMTD) is worth about $8 billion with just over six million clients, Smith Barney may be worth a great deal.
If recent news about Citi's problems are right and the bank may be facing a dividend cut, selling a large unit may be the bank's best chance at making its financial picture more stable.
Douglas A. McIntyre is an editor at 247wallst.com.
A look at the Nasdaq short interest on December 14, compared to November 30, shows that bets against discount brokers rose sharply. Short interest in E*Trade (NASDAQ: ETFC): moved up 3.9 million shares to 53.7 million, according to data from the exchange. That might have been expected, given the financial company's problems with mortgage related securities.
But, shares short in TD Ameritrade (NASDAQ: AMTD) jumped 8.2 million shares to 17.8 million, and short interest in Schwab (NASDAQ: SCHW) moved up by 6.1 million shares to 28.7 million. Both figures are a fairly large percentage increase.
The simple explanation for the rise may be that both stocks have done better than financial shares as a whole and are ready for a pull-back. Schwab's stock is up over 30% this year. Ameritrade is up just under 25%.
But there are two other possible explanations, both a bit more unsettling. One is that a bear market would likely hurt earnings at discount brokers. A recession early next year could cause individual investors to pull in their horns. The other theory is that the two firms could have balance sheet problems of their own. This is less likely, since neither company has made any disclosures to that effect.
Whatever the reason, a fairly large amount of money is being gambled that the discount brokerage stocks have peaked.
Douglas A. McIntyre is an editor at 247wallst.com.
Take-Two Interactive Software Inc (NASDAQ: TTWO) reported results after the bell on Tuesday. While its quarterly net loss was cut in half, forecast and sales outlook fell short of expectations. In after hours trading, TTWO shares fell 4%, although indication so far this morning is choppy.
Discount brokerage TD Ameritrade Holding Corp (NASDAQ: AMTD) raised its outlook for first-quarter earnings on Tuesday to 39 cents per share, up from its previous forecast of 27 cents to 33 cents. This is above the 32 cents per share analysts expect. The broker also said average daily trades per client rose to a record in November. Could it be that many try to actually time their trades in this volatile market?
Darden Restaurants Inc (NYSE: DRI) shares are down 8.5% in premarket trading after reporting a nearly 30% drop in quarterly net earnings after the bell on Tuesday. The parent of the Olive Garden and Red Lobster restaurant chains saw fewer customers, hurting sales just as food and acquisition costs rose.
Before the bell: Futures lower ahead of FedEx, Morgan results, oil supply
Professional investors like to use conference call transcripts as a valuable tool in their research toolbox. These are transcribed versions of an actual conference call, usually held publicly over the phone. Instead of listening to the full call, investors can get their hands on these things and read them at their leisure. They're generally full of information asked by both analysts and professional investors. 
As investors throughout the world get ready to usher in 2008, here is a stock pick that looks like it will be a big winner. 
Cramer on BloggingStocks: Paulson and Bernanke step up to the plate
Google's $1.7 billion YouTube deal going down the tubes?
Before the bell: Futures lower as oil rises, despite Alcoa earnings
