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:::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~:::
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Elusis
User ID: 325364
11/12/2007 11:15 AM
Report abusive post | :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~:::
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Nov. 12 (Bloomberg) -- E*Trade Financial Corp., the online brokerage that underwrites mortgages, declined as much as 32 percent in New York trading after the company said earnings will fall short of forecast because of a drop in the value of some securities.
Rating cuts on $208 million of asset-backed securities last month spurred a bigger-than-expected reduction in their value, E*Trade said in a regulatory filing after the close of official trading Nov. 9. The drop will require the company to record ``significant writedowns'' this quarter, the filing said.
E*Trade will post a loss in the fourth quarter after setting aside $500 million in extra money for bad loans and writedowns, Citigroup Inc. analyst Prashant Bhatia, wrote in a report. Clients of the New York-based company's brokerage unit may shift their accounts to rivals, while deposits at the bank could erode, wrote Bhatia, who cut his rating on the stock to ``sell'' from ``hold.''
``The extent of poor risk management in our view, has put the viability of the franchise at risk,'' said Bhatia, in the report entitled ``Bankruptcy Risk Cannot be Ruled Out.''
Chief Executive Officer Mitchell Caplan's strategy of building E*Trade's bank by tripling loans outstanding backfired as more borrowers fell behind on payments and U.S. home prices declined. The U.S. Securities and Exchange Commission also began an informal inquiry on Oct. 17 ``into matters related to the company's loan and securities portfolios,'' E*Trade said.
Shares Tumble
The company's shares sank to their lowest since May 2003 in trading before the open of U.S. exchanges, losing as much as $2.71 to $5.88 at 9 a.m. in New York. The stock has lost almost three-quarters of its value this year, wiping out about $7 billion in market value.
E*Trade is the worst performer among the 12 stocks tracked by the Amex Broker/Dealer Index. Shares of rivals Charles Schwab Corp. and TD Ameritrade Holding Corp. have advanced at least 10 percent this year.
E*Trade reported its first quarterly loss in five years last month and slashed its 2007 forecast because of rising costs for bad debts at the online bank. For the period ended Sept. 30, E*Trade lost $58.5 million, or 14 cents a share, compared with a profit of $153.2 million, or 35 cents, a year earlier.
E*Trade said 2007 profit would be between 75 cents and 90 cents a share, cutting its forecast for a fourth time this year. In September, the company estimated earnings of between $1.05 and $1.15 a share.
The company said in the filing that the value of some of its $450 million in asset-backed collateralized debt obligations had ``significant declines.'' E*Trade said it expects to remain ``well capitalized'' and will no longer provide an earnings forecast because of difficulty in valuing the securities.
``The writedowns will depend on future market developments, including potential additional downgrades, and the estimated fair values of these securities'' at the end of the year, E*Trade said.
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Elusis
User ID: 325364
11/12/2007 11:31 AM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
E*Trade Shares Fall; Analyst Says Bankruptcy Possible (Update2)
Nov. 12 (Bloomberg) -- E*Trade Financial Corp., the online brokerage that forecast a decline in fourth-quarter earnings, lost more than half its market value in New York trading after a Citigroup Inc. analyst said there's a chance the company may go bankrupt.
E*Trade will have to book ``significant writedowns'' this quarter for asset-backed securities that sank in value last month, the New York-based brokerage said in a Nov. 9 regulatory filing. Citigroup analyst Prashant Bhatia wrote in a report yesterday that poor management has ``put the viability of the franchise at risk.''
Chief Executive Officer Mitchell Caplan's strategy of building E*Trade's bank by tripling loans outstanding backfired as more borrowers fell behind on payments and U.S. home prices declined. The U.S. Securities and Exchange Commission also began an informal inquiry on Oct. 17 ``into matters related to the company's loan and securities portfolios,'' E*Trade said.
The online broker will post a loss in the fourth quarter after setting aside $500 million in extra money for bad loans and writedowns, Bhatia said. Clients in the company's brokerage unit may shift their accounts to rivals, while deposits at the bank could erode, said Bhatia, who cut his rating on the stock to ``sell'' from ``hold.''
Citigroup is ``downgrading to a sell based on the higher probability of a run on the bank,'' Bhatia said.
`Significant Writedowns'
Rating cuts on $208 million of asset-backed securities last month spurred a bigger-than-expected reduction in their value, E*Trade said in the filing. While the drop will require the company to record ``significant writedowns'' this quarter, the company said it expects to remain ``well capitalized.'' E*Trade also said it will no longer provide an earnings forecast because of difficulty in valuing the securities.
The company's shares fell $4.48, or 52 percent, to $4.11 at 10:41 a.m. in New York Stock Exchange composite trading, their lowest since March 2003. The stock has lost 82 percent of its value this year, wiping out about $7.9 billion in market value.
E*Trade is the worst performer among the 12 stocks tracked by the Amex Broker/Dealer Index. Shares of rivals Charles Schwab Corp. and TD Ameritrade Holding Corp. have advanced at least 10 percent this year.
E*Trade reported its first quarterly loss in five years last month and slashed its 2007 forecast because of rising costs for bad debts at the online bank. For the period ended Sept. 30, E*Trade lost $58.5 million, or 14 cents a share, compared with a profit of $153.2 million, or 35 cents, a year earlier.
`Potential Additional Downgrades'
E*Trade said 2007 profit would be between 75 cents and 90 cents a share, cutting its forecast for a fourth time this year. In September, the company estimated earnings of between $1.05 and $1.15 a share.
The company said in the filing that the value of some of its $450 million in asset-backed collateralized debt obligations had ``significant declines.''
``The writedowns will depend on future market developments, including potential additional downgrades, and the estimated fair values of these securities'' at the end of the year, E*Trade said.
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Anonymous Coward
User ID: 302909
11/12/2007 12:32 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
50% hair cut, ouch |
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Anonymous Coward
User ID: 268412
11/12/2007 12:36 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
Pull your money outta there ASAP. |
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Anonymous Coward
User ID: 184760
11/12/2007 12:39 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
i bet close to 100% of e-trades mortgages were sub-prime/Alt-A. |
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Elusis
User ID: 325364
11/12/2007 1:56 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
E*Trade Shares Fall; Analyst Says Bankruptcy Possible (Update3)
Nov. 12 (Bloomberg) -- E*Trade Financial Corp. lost more than half its market value after the online brokerage forecast a decline in fourth-quarter earnings and a Citigroup Inc. analyst said the company may go bankrupt.
E*Trade will book ``significant writedowns'' this quarter for asset-backed securities that sank in value last month, the New York-based brokerage said in a Nov. 9 regulatory filing. Citigroup's Prashant Bhatia wrote in a report yesterday that there's 15 percent chance the company will seek protection from creditors after poor management ``put the viability of the franchise at risk.''
Chief Executive Officer Mitchell Caplan's strategy of building E*Trade's bank by tripling loans outstanding backfired as borrowers fell behind on payments and U.S. home prices declined. The U.S. Securities and Exchange Commission also began an informal inquiry on Oct. 17 ``into matters related to the company's loan and securities portfolios,'' E*Trade said.
``A drop in the stock price this severe could prompt retail trading customers, who likely see the performance of E*Trade shares, to withdraw cash from their accounts,'' Lehman Brothers Holdings Inc. analyst Roger Freeman wrote in a report to clients today.
Pam Erickson, a spokeswoman for E*Trade, didn't immediately return a telephone call seeking comment.
E*Trade dropped $4.59, or 53 percent, to $3.99 at 11:38 a.m. on the Nasdaq Stock Market. The stock has fallen 82 percent year, wiping out about $7.9 billion in market value.
Rivals Rise
It's the worst performer in the 12-member Amex Securities Broker/Dealer Index this year, followed by Merrill Lynch & Co., which ousted CEO Stan O'Neal last month after reporting a record third-quarter loss. Merrill shares are down 40 percent.
E*Trade rivals Charles Schwab Corp. and TD Ameritrade Holding Corp. have advanced more than 17 percent this year.
Bhatia estimated that E*Trade will post a loss in the fourth quarter after setting aside $500 million in extra money for bad loans and writedowns. Clients in the company's brokerage unit may shift their accounts to rivals, while deposits at the bank could erode, said Bhatia, who cut his rating on the stock to ``sell'' from ``hold.''
Citigroup is ``downgrading to a sell based on the higher probability of a run on the bank,'' Bhatia said.
Rating cuts on $208 million of asset-backed securities last month spurred a bigger-than-expected reduction in their value, E*Trade said in the filing. While the drop will require the company to record ``significant writedowns'' this quarter, the company said it expects to remain ``well capitalized.'' E*Trade also said it will no longer provide an earnings forecast because of difficulty in valuing the securities.
`Significant Writedowns'
E*Trade reported its first quarterly loss in five years last month and slashed its 2007 forecast because of rising costs for bad debts at the online bank. For the period ended Sept. 30, E*Trade lost $58.5 million, or 14 cents a share, compared with a profit of $153.2 million, or 35 cents, a year earlier.
E*Trade said 2007 profit would be between 75 cents and 90 cents a share, cutting its forecast for a fourth time this year. In September, the company estimated earnings of between $1.05 and $1.15 a share.
The company said in the filing that the value of some of its $450 million in asset-backed collateralized debt obligations had ``significant declines.''
``The writedowns will depend on future market developments, including potential additional downgrades, and the estimated fair values of these securities'' at the end of the year, E*Trade said.
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Anonymous Coward
User ID: 325080
11/12/2007 3:12 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
ESlide shares are currently down -59%!!!!!!! |
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Anonymous Coward
User ID: 325080
11/12/2007 3:18 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
I wonder if they're going to experience a bank run similar to what happened to CountrySlide? |
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Elusis
User ID: 325364
11/12/2007 3:32 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
E*Trade Shares Fall; Analyst Says Bankruptcy Possible (Update4)
Nov. 12 (Bloomberg) -- E*Trade Financial Corp. lost more than half its market value after the online brokerage forecast a decline in fourth-quarter earnings and a Citigroup Inc. analyst said the company may go bankrupt.
E*Trade will book ``significant writedowns'' this quarter for asset-backed securities that sank in value last month, the New York-based brokerage said in a Nov. 9 regulatory filing. Citigroup's Prashant Bhatia wrote in a report yesterday that there's 15 percent chance the company will seek protection from creditors after poor management ``put the viability of the franchise at risk.''
Chief Executive Officer Mitchell Caplan's strategy of building E*Trade's bank by tripling loans outstanding backfired as borrowers fell behind on payments and U.S. home prices declined. The U.S. Securities and Exchange Commission also began an informal inquiry on Oct. 17 ``into matters related to the company's loan and securities portfolios,'' E*Trade said.
``A drop in the stock price this severe could prompt retail trading customers, who likely see the performance of E*Trade shares, to withdraw cash from their accounts,'' Lehman Brothers Holdings Inc. analyst Roger Freeman, who has an ``overweight/neutral'' rating on the shares, wrote in a report to clients today.
`Well Capitalized'
In a letter to customers posted on the company's Web site, Chief Operating Officer Jarrett Lilien said E*Trade is taking ``prudent measures'' to shore up its balance sheet. The firm would remain ``well capitalized'' by U.S. banking standards even if it had to write down $1 billion of assets, he said.
E*Trade dropped $4.89, or 57 percent, to $3.70 at 1:33 p.m. on the Nasdaq Stock Market. The stock has fallen 83 percent year, wiping out about $8 billion in market value.
The company is the worst performer in the 12-member Amex Securities Broker/Dealer Index this year, followed by Merrill Lynch & Co., which ousted CEO Stan O'Neal last month after reporting a record third-quarter loss. Merrill shares are down 40 percent.
Shares of E*Trade competitors Charles Schwab Corp. rose $1.30, or 5.9 percent, to $22.53 in Nasdaq Stock Market trading, while TD Ameritrade Holding Corp. climbed $1.08, or 6 percent. For the year, Schwab has advanced 21 percent and Ameritrade has risen 18 percent.
The rivals ``would benefit from any customer fallout,'' Fox- Pitt Kelton Cochran Caronia Waller analyst David Trone, who has an ``in line'' rating on E*Trade shares, wrote in an e-mail. ``Plus, if Ameritrade buys E*Trade's brokerage, then the price just got a lot smaller.''
`Run on the Bank'
Bhatia estimated that E*Trade will post a loss in the fourth quarter after setting aside $500 million in extra money for bad loans and writedowns. Clients in the company's brokerage unit may shift their accounts to rivals, while deposits at the bank could erode, said Bhatia, who cut his rating on the stock to ``sell'' from ``hold.''
Citigroup is downgrading E*Trade ``based on the higher probability of a run on the bank,'' Bhatia said.
``The management team is focused on serving our customers as we combat the market reaction to the irresponsible comments included in the recent Citigroup analyst report,'' E*Trade spokeswoman Pam Erickson said in an e-mailed statement. ``We take exception to the sensationalism based on unfounded speculation.''
`Significant Writedowns'
Rating cuts on $208 million of asset-backed securities last month spurred a bigger-than-expected reduction in their value, E*Trade said in the filing. The company said it expects to record ``significant writedowns'' this quarter and will no longer provide an earnings forecast because of difficulty in valuing the securities.
E*Trade reported its first quarterly loss in five years last month and slashed its 2007 forecast because of rising costs for bad debts at the online bank. For the period ended Sept. 30, E*Trade lost $58.5 million, or 14 cents a share, compared with a profit of $153.2 million, or 35 cents, a year earlier.
E*Trade said 2007 profit would be between 75 cents and 90 cents a share, cutting its forecast for a fourth time this year. In September, the company estimated earnings of between $1.05 and $1.15 a share.
The company said in the filing that the value of some of its $450 million in asset-backed collateralized debt obligations had ``significant declines.''
``The writedowns will depend on future market developments, including potential additional downgrades, and the estimated fair values of these securities'' at the end of the year, E*Trade said.
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AC25
User ID: 165225
11/12/2007 5:08 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
Is e trade financial separate from e trade bank? Anyone have an opinion on the safety of $ in E Trade Bank? All FDIC Insured.. for what that might be worth.
Actually you are probably better to be in the first bank to fail. They will save that one. After the 10th bank goes under.. you may not be so lucky. ???  |
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Anonymous Coward
User ID: 184760
11/12/2007 5:11 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
Is e trade financial separate from e trade bank? Anyone have an opinion on the safety of $ in E Trade Bank? All FDIC Insured.. for what that might be worth.
Actually you are probably better to be in the first bank to fail. They will save that one. After the 10th bank goes under.. you may not be so lucky. ???
pull it out. |
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Anonymous Coward
User ID: 268412
11/12/2007 5:30 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
No, the bank is very much part of the whole entity. You can review the 10-Q to verify this.
Is e trade financial separate from e trade bank? Quoting: AC25 165225 |
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Anonymous Coward
User ID: 325416
11/12/2007 6:43 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
pull it out. Quoting: Anonymous Coward 184760
That's what she said when the bed broke....  |
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Morna Moonrae
User ID: 281214
11/12/2007 7:19 PM
 | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
Elusis, you've been pinned!!! *clap clap
If this is medicine woah-oh
It tastes like medicine
Just help me get it in |
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Anonymous Coward
User ID: 323732
11/12/2007 7:27 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
LOL I'm not so sure anyone from Citi should be talking about other companies going bankrupt.
Citi is holding a lot of bad debt. |
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Elusis
User ID: 325364
11/12/2007 8:17 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
Elusis, you've been pinned!!! *clap clap Quoting: Morna Moonrae
Thank you dear.
Unfortunately its not really good news.
Swimming in a sea of fractals |
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Anonymous Coward
User ID: 281214
11/12/2007 8:32 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
Elusis, you've been pinned!!! *clap clap
Thank you dear.
Unfortunately its not really good news. Quoting: Elusis
no news is good new for gerry ganu |
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Anonymous Coward
User ID: 269684
11/12/2007 10:54 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
E-trade headed for bankrupctcy...prob. are now ...owe more than their assets are worth(them and every other corp in America). Microsoft is prob. the only solvent company in the U.S.. |
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Anonymous Coward
User ID: 184760
11/12/2007 10:56 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
E-trade headed for bankrupctcy...prob. are now ...owe more than their assets are worth(them and every other corp in America). Microsoft is prob. the only solvent company in the U.S.. Quoting: Anonymous Coward 269684
GE , XON and CSCO pretty strong too. |
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Anonymous Coward
User ID: 269684
11/12/2007 11:01 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
E-trade headed for bankrupctcy...prob. are now ...owe more than their assets are worth(them and every other corp in America). Microsoft is prob. the only solvent company in the U.S..
GE , XON and CSCO pretty strong too. Quoting: Anonymous Coward 184760
All in the commodity biz...deflation will make commods worthless. |
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Anonymous Coward
User ID: 184760
11/12/2007 11:03 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
GE and CSCO are not in the "strict-commodity" business.
and oil is oil.
i'm talking balance sheets. |
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Anonymous Coward
User ID: 268412
11/12/2007 11:06 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
"E*Trade says it has 3.6 million customers. Its bank has a million accounts and $40 billion in deposits, which are insured to at least $100,000 per customer by the Federal Deposit Insurance Corp. A company spokeswoman said there was a "slight increase" in withdrawals yesterday but nothing that "could possibly be defined as a run on the bank.""
[link to online.wsj.com] |
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Anonymous Coward
User ID: 269684
11/12/2007 11:09 PM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
I know you are talking balance sheets. What's on the asset side is deflating...what on the liability side is not. China will buy them if they can. Exxon & GE are globals...cisco is not going to sell much in the US. |
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Anonymous Coward
User ID: 314804
11/13/2007 12:08 AM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
eTrade is a buy now. EPS of 1.03, all those depository accounts, who cares about a mere $500M in bad debt. Pft, they just can't SELL the debt, they might be still servicing a lot of those loans and getting monthly income on them. That's the bullshit, they are writing off losses because they want to, it lowers their costs overall. Sure, they can't liquidate any of the loans but some of those they can probably save with free refi's, etc. This wipes their next 2 years of profits out, and a lot of goodwill, but they are a pretty well-managed place and have a lot of rep in the market. |
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Anonymous Coward
User ID: 301990
11/13/2007 12:18 AM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
...deflation will make commods worthless. Quoting: Anonymous Coward 269684
M3 is 16% (unreported)
that is called HYPERINFLATION, or MASSIVE PRINTING OF FEDERAL RESERVE NOTES
deflation my ass |
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DDT
User ID: 269684
11/13/2007 12:19 AM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
eTrade is a buy now. EPS of 1.03, all those depository accounts, who cares about a mere $500M in bad debt. Pft, they just can't SELL the debt, they might be still servicing a lot of those loans and getting monthly income on them. That's the bullshit, they are writing off losses because they want to, it lowers their costs overall. Sure, they can't liquidate any of the loans but some of those they can probably save with free refi's, etc. This wipes their next 2 years of profits out, and a lot of goodwill, but they are a pretty well-managed place and have a lot of rep in the market. Quoting: Anonymous Coward 314804
Uh HUH...WE WILL SEE. IF IT'S SUCH A GOOD DEAL SOME LBO(HEDGE FUND) WILL BUY THEM TOMORROW. |
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ddt
User ID: 269684
11/13/2007 12:22 AM | | Re: :::~E*Trade Shares Fall, Analyst Says Bankruptcy Possible~::: | Quote |
...deflation will make commods worthless.
M3 is 16% (unreported)
that is called HYPERINFLATION, or MASSIVE PRINTING OF FEDERAL RESERVE NOTES
deflation my ass Quoting: Anonymous Coward 301990
If you were right I would agree with you. |
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