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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: 7/31/2001 9:54 AM
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Well, since everyone is tired of discussing the changes to the fee structure, let's take a look at the quarterly brokerage results roundup instead.

Growth:

None. Well, actually, there was some modest growth in the number of accounts, and in customer assets, but revenues continued to shrink. In fact, this was the worst sequential decline since the same quarter in 2000, and unlike that quarter, this was not the immediate aftermath of the bubble. On the other hand, costs have generally been trimmed to keep pace with the slowdown.

Revenue Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $112,587 $118,987 $130,707 $133,768 $149,086 $170,305 $110,849 $74,478 $78,094 $63,562 $52,117 $39,557 $0
DIR $59,411 $71,394 $79,991 $79,250 $83,989 $114,213 $76,314 $54,881 $59,674 $47,202 $35,407 $0 $0
ET $308,179 $329,581 $333,766 $340,261 $330,341 $407,430 $246,008 $173,178 $151,742 $126,848 $115,920 $68,662 $62,316
SCH $1,071,000 $1,200,000 $1,335,000 $1,322,500 $1,404,600 $1,571,900 $1,127,400 $883,700 $982,102 $951,485 $788,600 $0 $0
TWE $282,800 $347,300 $359,500 $345,600 $488,700 $381,600 $253,100 $243,000 $0 $215,000 $169,600 $0

Revenue Growth (Seq) Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD -5% -9% -2% -10% -12% 54% 49% -5% 23% 22% 32%
DIR -17% -11% 1% -6% -26% 50% 39% -8% 26% 33%
ET -6% -1% -2% 3% -19% 66% 42% 14% 20% 9% 69% 10% 17%
SCH -11% -10% 1% -6% -11% 39% 28% -10% 3% 21%
TWE -19% -3% 4% -29% 28% 51% 4%

Accounts (End of Qtr Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD 1545 1478 1356 1233 1165 992 686 560 505 428 354 306 0
DIR 560 539 520 494 468 429 347 307 277 243 210 190 0
ET 3829 3725 3559 3315 2945 2614 1881 1551 1241 909 676 544 459
SCH 7700 7600 7500 7400 7200 6900 6600 6316 6166 5900 5600 5500 5300
TWE 3269 3241 3109 2979 2732 2356 2168 2066

Account Growth (Seq) Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD 4.5% 9.0% 10.0% 5.8% 17.4% 44.6% 22.5% 10.9% 18.0% 20.9% 15.7%
DIR 3.9% 3.7% 5.3% 5.6% 9.1% 23.6% 13.0% 10.8% 14.0% 15.7% 10.5%
ET 2.8% 4.7% 7.4% 12.6% 12.7% 30.0% 21.3% 25.0% 36.5% 34.5% 24.3% 18.5% 13.9%
SCH 1.3% 1.3% 1.4% 2.8% 4.3% 4.5% 4.5% 2.4% 4.5% 5.4% 1.8% 3.8% 6.0%
TWE 0.9% 4.2% 4.4% 9.0% 16.0% 8.7% 4.9%

Assets (End of Qtr) Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $26,200 $23,500 $27,900 $36,000 $34,800 $38,900 $31,600 $22,900 $22,600 $19,500 $14,900 $11,400 $0
DIR $23,000 $21,100 $22,800 $27,600 $27,500 $29,400 $20,300 $14,200 $13,300 $11,200 $8,900 $0 $0
ET $53,400 $47,900 $52,600 $65,900 $60,700 $65,200 $44,100 $28,400 $26,000 $21,000 $15,200 $11,200 $11,200
SCH $858,300 $805,800 $871,700 $961,000 $931,000 $823,000 $725,000 $595,000 $591,700 $542,000 $491,100 $408,200 $0
TWE $137,600 $154,100 $158,900 $165,300 $175,000 $150,200 $121,700 $112,700 $0 $95,700 $0 $0

Asset Growth (Seq) Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD 11.5% -15.8% -22.5% 3.4% -10.5% 23.1% 38.0% 1.3% 15.9% 30.9% 30.7%
DIR 9.0% -7.5% -17.4% 0.4% -6.5% 44.8% 43.0% 6.8% 18.8% 25.8%
ET 11.5% -8.9% -20.2% 8.6% -6.9% 47.8% 55.3% 9.2% 23.8% 38.2% 35.7% 0.0%
SCH 6.5% -7.6% -9.3% 3.2% 13.1% 13.5% 21.8% 0.6% 9.2% 10.4% 20.3%
TWE 0.0% -10.7% -3.0% -3.9% -5.5% 16.5% 23.4% 8.0%

Operating Efficiency:

Operating margin declined for most of these companies, except AMTD (which declined earlier this year). SCH's dropped into the teens for the first time I can remember, and ET also dropped sharply. These drops may reflect a one-time blip, but this is worrying if it turns out to be a long-term trend.

The worst performer of the bunch was DIR (by far), now renamed to CSFB Direct (formerly DLJ Direct). They seem to have retained their account and asset base through the transition, but their costs are badly outstripping their revenues. If CSFB doesn't get the red ink under control soon, I have to wonder how much longer DIR will last.

As expected, advertising budgets were slashed this quarter, although they're still pretty substantial by the standards of 3 years ago. Cost per net new account declined somewhat (note that this ratio is unreliable for SCH, which rounds reported figures to the nearest 100K accounts).

Operating Income Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $70 $7,891 ($23,032) $286 $4,598 $3,201 ($21,711) ($9,197) $8,918 $7,979 $3,742 $5,791 $0
DIR ($30,683) ($37,803) ($9,358) ($1,832) ($4,564) $14,819 ($820) ($2,238) $6,032 $7,173 $1,785 $0 $0
ET $20,112 $16,168 $5,004 $7,246 ($7,671) ($13,715) ($58,200) ($32,653) ($27,668) ($26,489) ($11,550) ($15,747) $6,560
SCH $126,000 $97,000 $138,700 $142,300 $137,100 $296,900 $170,500 $124,500 $150,991 $142,767 $106,400 $0 $0
TWE $6,500 $37,100 $42,200 $34,500 $76,600 $57,000 $20,900 $26,400 $0 $20,100 $14,500 $0

Net (pre-tax, pre-ad) Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $21,157 $16,868 $20,315 $33,904 $48,815 $60,326 $24,967 $10,512 $25,995 $25,684 $15,535 $12,941 $0
DIR ($41,539) ($51,422) ($2,125) $6,021 $12,073 $43,539 $24,718 $14,400 $24,473 $17,362 $8,244 $0 $0
ET $62,856 $96,624 $104,849 $101,019 $115,298 $154,846 $59,264 $27,896 $39,670 $36,926 $34,236 $10,294 $21,789
SCH $169,000 $258,000 $314,800 $303,000 $330,600 $511,800 $358,800 $261,500 $304,062 $288,583 $229,100 $0 $0
TWE $39,100 $92,900 $98,100 $90,200 $166,500 $137,400 $64,600 $63,600 $0 $49,600 $39,100 $0

Operating Margin Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD 18.8% 14.2% 15.5% 25.3% 32.7% 35.4% 22.5% 14.1% 33.3% 40.4% 29.8% 32.7% ERR
DIR -69.9% -72.0% -2.7% 7.6% 14.4% 38.1% 32.4% 26.2% 41.0% 36.8% 23.3% ERR ERR
ET 20.4% 29.3% 31.4% 29.7% 34.9% 38.0% 24.1% 16.1% 26.1% 29.1% 29.5% 15.0% 35.0%
SCH 15.8% 21.5% 23.6% 22.9% 23.5% 32.6% 31.8% 29.6% 31.0% 30.3% 29.1% ERR ERR
TWE 13.8% 26.7% 27.3% 26.1% 34.1% 36.0% 25.5% 26.2% ERR 23.1% 23.1% ERR

Ad Spending Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $18,688 $45,606 $57,477 $33,619 $41,222 $54,774 $58,662 $24,815 $12,105 $13,154 $9,643 $3,857 $0
DIR $6,782 $11,192 $13,075 $9,125 $19,990 $18,070 $25,452 $18,128 $13,232 $6,101 $5,228 $0 $0
ET $55,399 $93,698 $97,940 $91,773 $115,081 $177,484 $119,492 $77,443 $82,369 $60,006 $55,001 $37,171 $11,588
SCH $50,000 $94,000 $88,900 $62,600 $77,100 $103,700 $77,100 $57,700 $54,483 $52,591 $53,300 $0 $0
TWE $21,200 $28,000 $21,900 $23,400 $29,200 $36,100 $24,100 $14,600 $0 $11,500 $9,000 $0

Assets/Account Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $16,958 $15,900 $20,575 $29,197 $29,871 $39,214 $46,064 $40,893 $44,752 $45,561 $42,090 $37,255
DIR $41,071 $39,147 $43,846 $55,870 $58,761 $68,531 $58,501 $46,254 $48,014 $46,091 $42,381
ET $13,946 $12,859 $14,779 $19,879 $20,611 $24,943 $23,445 $18,311 $20,951 $23,102 $22,485 $20,588 $24,401
SCH $111,468 $106,026 $116,227 $129,865 $129,306 $119,275 $109,848 $94,205 $95,962 $91,864 $87,696 $74,218
TWE $42,092 $47,547 $51,110 $55,488 $64,056 $63,752 $56,135 $54,550

Ad Cost/New Account Q2 2001 Q1 2001 Q4 2000 Q3 2000 Q2 2000 Q1 2000 Q4 1999 Q3 1999 Q2 1999 Q1 1999 Q4 1998 Q3 1998 Q2 1998
AMTD $278.93 $373.82 $467.29 $494.40 $238.28 $179.00 $465.57 $451.18 $157.21 $177.76 $200.90
DIR $322.95 $589.05 $502.88 $350.96 $512.56 $220.37 $636.30 $604.27 $389.18 $184.88 $261.40
ET $532.68 $564.45 $401.39 $248.04 $347.68 $294.33 $362.10 $249.82 $248.10 $257.54 $416.67
SCH $500.00 $940.00 $889.00 $313.00 $257.00 $345.67 $271.48 $384.67 $204.82 $175.30 $533.00
TWE $757.14 $212.12 $168.46 $94.74 $77.66 $192.02 $236.27


Summary:

Another dismal quarter, but little indication that any of the larger players are in serious financial trouble. They're mostly breaking even, on an operating basis.

The long-expected consolidation has begun, in a modest way; ET bought WebStreet, and now AMTD is buying NDB (which Deutsche Bank bought last year, primarily for their market-making operation). These acquisitions cost between $500 and $750 per account, so growth by acquisition is finally starting to be competitive with organic growth.

And now, back to our long running discussion of inactivity fees. 8-)

-- stward
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