The last several months have not been pleasant ones for those in the financial services markets. But as summer arrives, it begins to appear that the majority of bloodletting is past. There is sure to be more in the near term, but from all appearances companies are starting to see the light in terms of massive write-downs. Admitting what is obvious, and planning how to move forward, is where the financial services market is now, with those making the right moves first likely to come out of the current mess in the best shape.
E*TRADE Financial Corporation, a financial solutions provider to retail and institutional investors, offers a full range of financial services primarily through its online presence. The company’s outward persona is generally as an online facilitator for the average investor, although it does offer a large selection of financial services. The company has been a part of the recent and continuing financial services meltdown, but has taken steps to support its current and future direction. A refocusing on its core customer base and the bolstering of its cash position for retail banking and brokerage aspects of the company appear to be well received.
To make this particular realignment of the company work, it needs an increase in new accounts on its web-based trading system. From all reports this has been occurring, with the last quarter seeing 60,000 new accounts. This brings total accounts to 4.8 million. Given current trends affecting all financial services sectors, this bodes well for the company, as reflected in its stock price at opening Friday. Granted the company has quite a distance to go until it regains its position of summer 2007, but positive action is being taken.
The common refrain often heard these days where financial services are concerned is “when is the next shoe going to drop?” There may well be another shoe to drop, but financial concerns entwined in the financial services mess have stepped up and dealt with the issue in a remarkable way. Although considered at a slow pace by many, companies are dropping many of their financial curtains and disclosing their losses sooner rather than later, giving a relative degree of transparency regarding that company’s current position and future exposure. A strong stomach may be necessary, but for the longer term investor, E*TRADE has made its changes and looks to be ready to move.
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