E*TRADE Reduces Debt By $95.8 Mln. In Q2; Says Retail Business Strong

(RTTNews) - Investment brokerage firm E*TRADE Financial Corp. (ETFC | Quote | Chart | News | PowerRating) Monday reported a $95.8 million reduction in debt during the second quarter through a series of debt-for-equity exchanges. The company said the strength of its retail business helped generate earnings in the Bank to absorb the larger than expected credit losses. The company indicated continued growth in retail franchise during the second quarter, positively impacted by new customer accounts and asset flows, despite the challenging credit environment. Following the news, ETFC stock gained about 2.26% on Nasdaq.

For the 2008 year-to-date period, New York-based E*TRADE reduced its total debt by $155.8 million and continues to expect excess risk-based capital to reach $1 billion by the end of the year. The debt-for-equity exchanges are expected to provide cost-effective means to reduce the company's corporate interest expense.

E*TRADE plans to report its second-quarter financial results on July 22, 2008. Fourteen Street analysts surveyed by First Call/Thomson Financial expect the company to report a loss of $0.13 per share for second quarter.

For first quarter, E*TRADE reported a net loss of $91.2 million compared to a profit last year as revenues plunged to $316.24 million from $644.99 million last year, hurt by continued softness in trading activities amidst the slowing economy.

Amongst peers, TD AMERITRADE Holding Corp. (AMTD | Quote | Chart | News | PowerRating) reported a 30% increase in its second-quarter net income, boosted by revenue growth on improved daily trades and net new client assets. Another financial services provider, Charles Schwab Corp. (SCHW | Quote | Chart | News | PowerRating) reported a 12% growth in its first-quarter profit on higher revenues helped by increase in net new clients.

E*TRADE recorded a 16.1% year-over-year drop in its April retail customer assets, while total retail accounts at end of the period increased 4.2% to 4.77 million. In April, E*TRADE eliminated about $2.3 billion in total customer assets and nearly 24 thousand accounts.

In April, Mathew Audette, Controller and Executive Vice President of E*TRADE, assumed the role of acting chief financial officer of the company, following the resignation of Chief Financial Officer, Robert Simmons.

ETFC is currently trading up 2.26% at $3.17 on Nasdaq, on a volume of about 10.79 million shares. The stock has been trading in a range of $2.08 to $23.63 for the past twelve months, with a three-month average volume of around 20.93 million shares.

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