E*Trade CEO: Company To Boost Marketing Expenses Over Time
04 June 2010 - 12:39AM
Dow Jones News
E*Trade Financial Corp (ETFC) Chief Executive Steven Freiberg
said Thursday the online brokerage expects to increase its
marketing expenses over time.
Speaking to investors in a breakout session at the Sandler
O'Neill & Partners LP Global Exchange and Brokerage Conference,
Freiberg acknowledged that E*Trade has maintained such costs while
competitors have boosted their own expenses to attract
investors.
"We need to find ways to close that gap," Freiberg said, adding
that E*Trade needs to do so in a "measured and intelligent
way."
Freiberg said E*Trade spends between $110 million to $115
million a year for its marketing, which includes its well-known
talking baby TV commercials. E*Trade expects to diversify its ads
to focus more on its product offerings in the future, Freiberg
said.
By comparison, earlier at the conference, TD Ameritrade Holding
Corp. (AMTD) Chief Executive Fred Tomczyk said his company spends
$141 million to $200 million a year in such costs.
Freiberg, making his first conference appearance since taking
over as CEO on April 1, said E*Trade will reassess its order flow
agreement with Citadel Investment Group, its largest shareholder
and bondholder, over the next several months. The company routes
40% of its "marketable customer orders" in all publicly traded
stocks to Citadel. The current deal between the two firms is set to
expire in late November.
"We can internalize some [orders] if we want to, but others we
can't," he said, adding that E*Trade doesn't make a market in
options."
Freiberg said he spent the last day and a half meeting with
personnel from the firm's market-making business in Chicago.
When asked about a potential merger with a competitor, Freiberg
said his focus is on growing the franchise, even joking that "under
my job description, it doesn't say sell the company."
Freiberg also said growth in the registered investment adviser
space isn't on E*Trade's list of top priorities.
His comments come a day after E*Trade's 1-for-10 reverse stock
split took effect. The measure, typically done to boost a company's
stock price, cut the number of authorized shares outstanding to 400
million from 4 billion. E*Trade's stock price has lagged below $2
since November 2008, hurt by heavy losses within its bank's
mortgage portfolio.
Shares of E*Trade were recently up 34 cents, or 2.3%, at
$15.33.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173;
brett.philbin@dowjones.com
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