TDAMERITRADE 1Q Profit Falls 23%, Cuts Outlook:

Posted by Kris | Tuesday, January 20, 2009 | | 0 comments »

NOT a very good sign when a major brokerage like TDAMERITRADE starts to lose money admist heavy selling which inevitably should provides higher number of trades.

OMAHA, Neb. (AP) -- Online brokerage TD Ameritrade said Tuesday its first-quarter profit dropped 23 percent and cut its outlook for the year because of the nation's economic problems.

The Omaha-based company said it earned $184.4 million, or 31 cents per share, in the quarter that ended Dec. 31, down from $240.8 million, or 40 cents per share, a year ago.

Thomson Reuters said analysts it surveyed expected Ameritrade to report net income of 31 cents per share on average in the first quarter.

But Ameritrade cut its earnings guidance for the year to between 90 cents and $1.15 per share. That's down from its prediction last fall of earnings between $1.10 and $1.42 per share in fiscal 2009.

"Our fundamentals and balance sheet remain strong," chief financial officer Bill Gerber said in a statement. "But we see no signs that the overall economic environment is strengthening and may not for the balance of our fiscal year."

Ameritrade said it generated $610.7 million revenue during the first quarter, thanks mainly to the high number of trades.

But the interest rate cuts the Federal Reserve made over the past year significantly reduced the interest-based revenue Ameritrade could collect, so quarterly revenue was down from last year's $641.6 million.

Analysts expected Ameritrade to report revenue of $618.8 million on average.

Ameritrade said it handled an average of 357,294 trades per day during the quarter, and that helped boost transaction-based revenue to $287.1 million from $260.3 million in the same period a year ago, when it handled 311,433 trades a day.--> Bear market should have produced high downward volumes, but yet no much revenue profit from this segment?? This is weird

Ameritrade's asset-based revenue fell nearly 15 percent to $317.2 million in the quarter. --> This is common as asset class is dropping like no tommorow

But Chief Executive Fred Tomczyk said he considered this a strong quarter in the midst of the nation's economic problems.

Earlier this month, Ameritrade announced plans to buy options trading specialist thinkorswim Group Inc. in a cash and stock deal worth roughly $606 million. Ameritrade officials said the thinkorswim deal, which is expected to close within six months, will strengthen the brokerage's trading business and add better tools for advanced options trades.--> Another bad timing for acquistions.