"Like the daughter calling from college to announce she got all A's, BUT is also pregnant BUT its by Warren Buffetts Grandson."
BUT he's happily married with 3 kids!!
Co issues upside guidance for Q1 (Dec), raises EPS to $0.23-0.24, excluding non-recurring items, from $0.18-0.21 vs. $0.20 Capital IQ Consensus; raises Q1 (Dec) revs to $487-491 mln, excluding non-recurring items, from $477-487 mln vs. $481.00 mln Capital IQ Consensus.
Co has appointed Bill Robbins as executive vice president, Worldwide Sales.
"Schwab’s money-market fee waivers cost the firm $700 million in revenue in 2013."
Nice to see that number quantified. No one expects it but if rates do suddenly jump up it's a serious revenue bomb going directly to Chuck's bottom line.
"Raymond James analysts Patrick O’Shaughnessy and Cory Dlugozima explain higher interest rates by not give Charles Schwab the boost many are expecting:
While Schwab does have significant upside to rising interest rates, we believe dramatically improved earnings through higher interest rates remains years away given Schwab’s relative insensitivity to the long end of the curve. Trading at 24x our 2015 EPS estimate of $1.10, we continue to believe Schwab’s shares are overvalued given the firm’s increasingly capital-intensive, bank-like profile.
One of the big problems: Short-term interest rates could stay low for even longer. That hits Schwab where it hurts because Schwab’s money-market fee waivers cost the firm $700 million in revenue in 2013.
E*Trade, which O’Shaughnessy and Dlugozima rate Market Perform, looks better, but only just. They explain:
E*TRADE’s earnings outlook improved significantly over the course of 2013, highlighted by long-awaited regulatory approval to dividend capital from the bank to the parent, completion of a $110 million cost-reduction program, and a stabilizing net interest spread. That said, with E*TRADE’s shares trading at ~17x our 2015 EPS estimate of $1.15, we believe these positive factors are reflected in the current valuation.
Shares of Charles Schwab have ticked up 0.1% to $25.85 at 11:33 a.m., while E*Trade has jumped 1.5% to $20.10, TD Ameritrade has gained 0.5% to $30.59 and LPL Financial has risen 0.6% to $47.35."
No way to know how high the Obama rally drags financials along but it's becoming clearer that none are cheap at these levels.
"There's a quiet confidence to the senior management team," said Patrick O'Shaughnessy, an equity research analyst at Raymond James in Chicago. "They don't go around boasting about the company. They just do their jobs and keep executing and attracting top talent."
Unlike two of its biggest rivals, Charles Schwab (SCHW) and ETrade Financial (ETFC), TD Ameritrade doesn't own a bank. Instead, it reached an agreement with TD Bank Financial Group to acquire the U.S. brokerage business of TD Waterhouse USA in 2005. As part of the agreement, TD Bank Financial Group became TD Ameritrade's largest shareholder.
"The partnership with TD Bank allows TD Ameritrade to return more capital to shareholders," O'Shaughnessy said. "Its return on capital to shareholders is best-in-class."
He also lauds the firm's expense management, noting that its expenses have remained roughly flat for the past three years.
More Active Traders
In 2009, TD Ameritrade strengthened its relationship with active traders by acquiring Thinkorswim, an online brokerage with extensive investor education offerings.
"This has proven to be a very intelligent acquisition," O'Shaughnessy said. "It enhanced their trading tools, increased their options trading and kept them best-of-class in trading technology."
More options trading means more recurring revenue, due to the frequency of such trades.
"With options, you are constantly entering into new contracts because options expire," said Chris Shutler, an equity research analyst at William Blair & Co. in Chicago. "Options and futures are now about 40% of TD Ameritrade's total trading activity."
Shutler praises Tomczyk and his team for "focusing the organization on a few key initiatives each year." In addition to the firm's push to boost options trading, Shutler cites another example: its Amerivest program that offers portfolio management advice based on fund recommendations from Morningstar.
TD Ameritrade Benefits From A Series Of Smart Moves
By MOREY STETTNER,
FOR INVESTOR'S BUSINESS DAILY
On Oct. 28, 2008, Fred Tomczyk held his first town hall meeting with TD Ameritrade's 6,000 employees. As the firm's new CEO, he faced two challenges: Reassuring his team amid a meltdown in global financial markets while announcing a restructuring of the online brokerage firm's business model.
"They were worried about their ability to survive the crisis and just wanted to stay employed," Tomczyk wrote in a recent blog posted on LinkedIn. "I'm sure some thought I was crazy."
But Tomczyk persevered. Determined not to fret about an economic free fall that he couldn't control, he launched a bold campaign for change and laid out what he called "a clear path for execution."
The restructuring, which was already in the planning stages before Tomczyk became CEO, involved shifting the Omaha, Neb.-based company's growth strategy from acquisition-based to organic. It proved a wise move: TD Ameritrade Holdings (AMTD) has produced five years of double-digit organic net new client asset growth, gained market share and improved its employee engagement and client satisfaction ratings.
Tomczyk's ability to level with employees and focus their efforts on what matters most led to a change in mindset. People started thinking opportunistically about the firm's long-term success rather than getting mired in survival mode.
Price wars are sporadic and the effects incremental. The pain shows up in trading volumes and revenues that should be soaring since we're in Year Five of the Great Obama rally but trading revenue remains relatively flat.
I think the free ETF trading movement has taken a toll. A couple of years before that the wave was everyone had to get their commission below $10. Someone will move to get it below $5 eventually, maybe robinhood will trigger it or one of the OLB will just decide to take he plunge. It's slow erosion.
Here's an imperfect comparison but SCHW did $5.1 billion in revenue in 2008 and 4.9B in 2012. Obviously some of the drop off was due to rate issues but free ETF trading and lower commissions had an effect, IMHO.
Look at it from the other side, when's the last time an OLB raised commissions? For sure it ain't a two way street.
I'd never heard of it until yesterday when I got a e-mail news feed which I posted verbatim,FYI. Today, another article came out on Yahoo finance under this title:
Fri, Dec 20, 2013, 7:21pm EST - US Markets are closed
Robinhood Closes $3 Million in Seed Funding for First Zero-Commission Mobile-Focused Stock Brokerage
Index Ventures, a16z Seed and Other VCs Participate; Robinhood Financial LLC Receives Approval From FINRA
Point is commissions will always be under price pressure which is one reason I argue that AMTD and SCHW have a natural advantage going into rate normalization.
Don't know how big an advantage or when the respective pps will reflect the advantage but logic tells me it will occur.
The reason this is even worth mentioning is the Google sponsorship, they've shown they can "disrupt" entrenched industries.
Commission pricing is continually under pressure . Chuck and Pony were wise to focus on asset management strategies.
"Schwab (SCHW -0.5%), E*Trade (ETFC +1%), and TD Ameritrade (AMTD +1.1%) will surely have an eye on the launch of Google-backed (among others) Robinhood, which will offer commission-free stock trading beginning early next year.
It costs next to nothing for a brokerage to place a trade, and the engineers at Robinhood have found a way to actually make money doing it - allowing the $0 fee."
Similar expectations of massive revenue spurts were spurred by the launch of "Sync" and "Siri"
but they never showed up in the earnings reports.Why will this be different?
More amazing is his departure seems to coincide with all the online brokers shooting up.
He's obviously a very powerful figure!