Rising fees drive Ameritrade, Schwab
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Greg Morcroft, MarketWatch
Last Update: 12:07 PM ET Jul 18, 2006
NEW YORK (MarketWatch) -- Online financial services firms Charles Schwab Corp. and TD Ameritrade both posted double-digit quarterly earnings growth Tuesday, as the traditionally commission-driven firms said they are successfully diversifying their revenue streams and generating more fees based on client assets.
TD Ameritrade (AMTD : td ameritrade hldg corp com
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AMTD14.69, +1.05, +7.7%) shares rose nearly 6.2% to $14.46, and Schwab (SCHW : Charles Schwab & Co., Inc.
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SCHW14.37, +0.11, +0.8%) added 1.4% to $14.50.
Omaha-based Ameritrade said that despite difficult market conditions during its fiscal third quarter, profit rose 67% as revenue more than doubled, driven by strong growth in asset-based fees.
Ameritrade said net income in the quarter rose to $139.8 million, or 23 cents a share, compared to $83.6 million, or 20 cents a share in the year-ago period. Analysts polled by Thomson First Call had, on average, expected the firm to earn 22 cents a share.
The company reported net revenue of $540.3 million in the latest quarter, compared to $234.4 million a year ago. The First Call-derived average estimate stood at $544 million.
"Now as we become more recognized for becoming an asset gatherer in the marketplace, I believe that ultimately over time that will also have a positive impact on our multiple," CEO Joe Moglia said in a conference call.
"Despite a decline in investor activity in June, we realized a record quarter, thanks in part to an increase in asset-based revenues," Moglia said.
Total client assets at Ameritrade dipped slightly to $255.3 billion at the end of the third quarter, from $262.9 billion at the end of the second quarter.
The company also said it reaffirmed it earnings outlook for the fourth quarter, and said it expects to earn 94 cents to $1 in fiscal 2006. Excluding previously expected gains from a sale of a position in Knight Capital (NITE : knight capital group inc cl a
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NITE14.34, +0.36, +2.6%) , it said it would earn 87 cents to 93 cents a share in fiscal 2006.
Moreover, management boosted the outlook for fiscal 2007 to 99 cents to $1.21 a share.
Ameritrade's clients made an average 252,784 trades a day in the third quarter, down slightly from the 254,382 during the second quarter.
New accounts opened in the quarter totaled 128,000, down from 140,000 in the previous quarter, while clients closed 59,000 accounts in the third quarter, compared to 61,000 in the second quarter. The company ended the quarter with 6.14 million accounts, compared to 6.07 million accounts at the end of the second quarter.
Also Tuesday, Charles Schwab Corp. said second-quarter profit rose 35% as rising asset-based fees compensated for more reserved client trading activity.
The San Francisco-based company said it earned $251 million, or 19 cents a share, on revenue of $1.31 billion, compared to a profit of $186 million, or 14 cents, generated on revenue of $1.01 billion in the year-ago second quarter. Analysts polled by Thomson First Call, on average, had expected the company to earn 20 cents a share in the latest quarter.
"Total client assets reached $1.278 trillion as of June 30, 2006, 16% higher than month-end June 2005," CEO Charles Schwab said in a press release Tuesday morning.
Schwab said daily average revenue trades in the June quarter reached 250,700 from 176,500 a year ago, but this pace declined from 275,200 in the first quarter.
Clients at Schwab opened 173,000 new brokerage accounts and brought $22 billion in net new assets to the company during the period, up by 20% and 93%, respectively, from year-ago levels, the company said
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Greg Morcroft, MarketWatch
Last Update: 12:07 PM ET Jul 18, 2006
NEW YORK (MarketWatch) -- Online financial services firms Charles Schwab Corp. and TD Ameritrade both posted double-digit quarterly earnings growth Tuesday, as the traditionally commission-driven firms said they are successfully diversifying their revenue streams and generating more fees based on client assets.
TD Ameritrade (AMTD : td ameritrade hldg corp com
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Last: 14.69+1.05+7.70%
12:22am 07/19/2006
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AMTD14.69, +1.05, +7.7%) shares rose nearly 6.2% to $14.46, and Schwab (SCHW : Charles Schwab & Co., Inc.
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Last: 14.37+0.11+0.77%
12:22am 07/19/2006
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SCHW14.37, +0.11, +0.8%) added 1.4% to $14.50.
Omaha-based Ameritrade said that despite difficult market conditions during its fiscal third quarter, profit rose 67% as revenue more than doubled, driven by strong growth in asset-based fees.
Ameritrade said net income in the quarter rose to $139.8 million, or 23 cents a share, compared to $83.6 million, or 20 cents a share in the year-ago period. Analysts polled by Thomson First Call had, on average, expected the firm to earn 22 cents a share.
The company reported net revenue of $540.3 million in the latest quarter, compared to $234.4 million a year ago. The First Call-derived average estimate stood at $544 million.
"Now as we become more recognized for becoming an asset gatherer in the marketplace, I believe that ultimately over time that will also have a positive impact on our multiple," CEO Joe Moglia said in a conference call.
"Despite a decline in investor activity in June, we realized a record quarter, thanks in part to an increase in asset-based revenues," Moglia said.
Total client assets at Ameritrade dipped slightly to $255.3 billion at the end of the third quarter, from $262.9 billion at the end of the second quarter.
The company also said it reaffirmed it earnings outlook for the fourth quarter, and said it expects to earn 94 cents to $1 in fiscal 2006. Excluding previously expected gains from a sale of a position in Knight Capital (NITE : knight capital group inc cl a
News , chart, profile, more
Last: 14.34+0.36+2.58%
12:22am 07/19/2006
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NITE14.34, +0.36, +2.6%) , it said it would earn 87 cents to 93 cents a share in fiscal 2006.
Moreover, management boosted the outlook for fiscal 2007 to 99 cents to $1.21 a share.
Ameritrade's clients made an average 252,784 trades a day in the third quarter, down slightly from the 254,382 during the second quarter.
New accounts opened in the quarter totaled 128,000, down from 140,000 in the previous quarter, while clients closed 59,000 accounts in the third quarter, compared to 61,000 in the second quarter. The company ended the quarter with 6.14 million accounts, compared to 6.07 million accounts at the end of the second quarter.
Also Tuesday, Charles Schwab Corp. said second-quarter profit rose 35% as rising asset-based fees compensated for more reserved client trading activity.
The San Francisco-based company said it earned $251 million, or 19 cents a share, on revenue of $1.31 billion, compared to a profit of $186 million, or 14 cents, generated on revenue of $1.01 billion in the year-ago second quarter. Analysts polled by Thomson First Call, on average, had expected the company to earn 20 cents a share in the latest quarter.
"Total client assets reached $1.278 trillion as of June 30, 2006, 16% higher than month-end June 2005," CEO Charles Schwab said in a press release Tuesday morning.
Schwab said daily average revenue trades in the June quarter reached 250,700 from 176,500 a year ago, but this pace declined from 275,200 in the first quarter.
Clients at Schwab opened 173,000 new brokerage accounts and brought $22 billion in net new assets to the company during the period, up by 20% and 93%, respectively, from year-ago levels, the company said
