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Author: stward One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10679  
Subject: Quarterly Results Date: 1/25/2001 12:12 AM
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Here's this quarter's summary of the online brokerage results. I don't have results yet for DIR or TWE, but the rest of the numbers are up to date. I've removed NDB from the comparisons, as they are no longer independent. They weren't a particularly useful comparison anyway (they were so much smaller than the rest).

Growth:

As we are all too aware, it was a very difficult quarter for the online brokerages (and the market in general) - for the third straight quarter. This cut into growth (especially asset growth, with NASDAQ down 30% or more), but it didn't entirely stop it. It certainly didn't push any of these businesses into folding (one respect in which these brokerages differ from the dot-bombs, even if the stock prices have behaved the same way).

Revenue Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD $130,707 $133,768 $149,086 $170,305 $110,849 $74,478 $78,094 $63,562 $52,117
DIR $79,250 $83,989 $114,213 $76,314 $54,881 $59,674 $47,202 $35,407
EGRP $333,766 $340,261 $330,341 $407,430 $246,008 $173,178 $151,742 $126,848 $115,920
SCH $1,335,000 $1,322,500 $1,404,600 $1,571,900 $1,127,400 $883,700 $982,102 $951,485 $788,600
TWE $359,500 $345,600 $488,700 $381,600 $253,100 $243,000 $215,000

Revenue Growth (Seq) Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD -2% -10% -12% 54% 49% -5% 23% 22% 32%
DIR -6% -26% 50% 39% -8% 26% 33%
EGRP -2% 3% -19% 66% 42% 14% 20% 9% 69%
SCH 1% -6% -11% 39% 28% -10% 3% 21%
TWE 4% -29% 28% 51% 4%

Accounts (End of Qtr) Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD 1356 1233 1165 992 686 560 505 428 354
DIR 494 468 429 347 307 277 243 210
EGRP 3559 3315 2945 2614 1881 1551 1241 909 676
SCH 7500 7400 7200 6900 6600 6316 6166 5900 5600
TWE 3109 2979 2732 2356 2168 2066

Account Growth (Seq) Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD 10.0% 5.8% 17.4% 44.6% 22.5% 10.9% 18.0% 20.9% 15.7%
DIR 5.6% 9.1% 23.6% 13.0% 10.8% 14.0% 15.7% 10.5%
EGRP 7.4% 12.6% 12.7% 30.0% 21.3% 25.0% 36.5% 34.5% 24.3%
SCH 1.4% 2.8% 4.3% 4.5% 4.5% 2.4% 4.5% 5.4% 1.8%
TWE 4.4% 9.0% 16.0% 8.7% 4.9%

Assets (End of Qtr) Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD $27,900 $36,000 $34,800 $38,900 $31,600 $22,900 $22,600 $19,500 $14,900
DIR $27,600 $27,500 $29,400 $20,300 $14,200 $13,300 $11,200 $8,900
EGRP $52,600 $65,900 $60,700 $65,200 $44,100 $28,400 $26,000 $21,000 $15,200
SCH $872,000 $961,000 $931,000 $823,000 $725,000 $595,000 $591,700 $542,000 $491,100
TWE $158,900 $165,300 $175,000 $150,200 $121,700 $112,700 $95,700

Asset Growth (Seq) Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD -22.5% 3.4% -10.5% 23.1% 38.0% 1.3% 15.9% 30.9% 30.7%
DIR 0.4% -6.5% 44.8% 43.0% 6.8% 18.8% 25.8%
EGRP -20.2% 8.6% -6.9% 47.8% 55.3% 9.2% 23.8% 38.2% 35.7%
SCH -9.3% 3.2% 13.1% 13.5% 21.8% 0.6% 9.2% 10.4% 20.3%
TWE -3.9% -5.5% 16.5% 23.4% 8.0%


Operating Efficiency:

For the third quarter in a row, SCH's operating margin has stuck in the low 20's, 8-10% below its historic average. It is becoming clear that this is a long-term shift (probably as a result of the changes in SCH's business following the USTrust acquisition), and this is not particularly good news for SCH investors. AMTD's operating margin dropped into the mid-teens, but it would have been in the high 20's if it weren't for their continuing investment in the OnMoney subsidiary. This investment is looking less and less likely to pay off, but only time will tell.

The oddball of the bunch is EGRP (soon to be ET); their operating margins stayed in the low 30's, despite a very difficult market environment. Their operations seem to be getting more predictable in recent quarters, which I take as a sign of a well-run business.

Advertising spending was moderately heavy this quarter, in spite of the hostile market climate (SCH and AMTD both increased their spending sharply). Cost per new account was up, although not sharply - except for SCH, and that may be misleading (SCH publishes figures to the nearest 100K accounts, so the real figure could easily be off by $300 per account). Customers are hard to attract when the market is all doom and gloom; it is too soon to tell if this is part of a long-term decline in advertising effectiveness.


Operating Income Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD ($23,032) $286 $4,598 $3,201 ($21,711) ($9,197) $8,918 $7,979 $3,742
DIR ($1,832) ($4,564) $14,819 ($820) ($2,238) $6,032 $7,173 $1,785
EGRP $5,004 $7,246 ($7,671) ($13,715) ($58,200) ($32,653) ($27,668) ($26,489) ($11,550)
SCH $138,700 $142,300 $137,100 $296,900 $170,500 $124,500 $150,991 $142,767 $106,400
TWE $42,200 $34,500 $76,600 $57,000 $20,900 $26,400 $20,100

Net (pre-tax, pre-ad) Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD $20,315 $33,904 $48,815 $60,326 $24,967 $10,512 $25,995 $25,684 $15,535
DIR $6,021 $12,073 $43,539 $24,718 $14,400 $24,473 $17,362 $8,244
EGRP $104,849 $101,019 $115,298 $154,846 $59,264 $27,896 $39,670 $36,926 $34,236
SCH $314,800 $303,000 $330,600 $511,800 $358,800 $261,500 $304,062 $288,583 $229,100
TWE $98,100 $90,200 $166,500 $137,400 $64,600 $63,600 $49,600

Operating Margin Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD 15.5% 25.3% 32.7% 35.4% 22.5% 14.1% 33.3% 40.4% 29.8%
DIR 7.6% 14.4% 38.1% 32.4% 26.2% 41.0% 36.8% 23.3%
EGRP 31.4% 29.7% 34.9% 38.0% 24.1% 16.1% 26.1% 29.1% 29.5%
SCH 23.6% 22.9% 23.5% 32.6% 31.8% 29.6% 31.0% 30.3% 29.1%
TWE 27.3% 26.1% 34.1% 36.0% 25.5% 26.2% 23.1%

Ad Spending Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD $57,477 $33,619 $41,222 $54,774 $58,662 $24,815 $12,105 $13,154 $9,643
DIR $9,125 $19,990 $18,070 $25,452 $18,128 $13,232 $6,101 $5,228
EGRP $97,940 $91,773 $115,081 $177,484 $119,492 $77,443 $82,369 $60,006 $55,001
SCH $88,900 $62,600 $77,100 $103,700 $77,100 $57,700 $54,483 $52,591 $53,300
TWE $21,900 $23,400 $29,200 $36,100 $24,100 $14,600 $11,500

Ad Cost/ New Account Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998
AMTD $467.29 $494.40 $238.28 $179.00 $465.57 $451.18 $157.21 $177.76 $200.90
DIR $350.96 $512.56 $220.37 $636.30 $604.27 $389.18 $184.88 $261.40
EGRP $401.39 $248.04 $347.68 $294.33 $362.10 $249.82 $248.10 $257.54 $416.67
SCH $889.00 $313.00 $257.00 $345.67 $271.48 $384.67 $204.82 $175.30 $533.00
TWE $168.46 $94.74 $77.66 $192.02 $236.27


Summary:

It was a really tough year, both for the businesses and their stocks, but 2001 is starting off nicely. Hopefully there are brighter times ahead. Certainly there's no indication that these companies' survival is at risk.

-- stward
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