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E*Trade reports 3Q loss, record account growth

Waiting for E*Trade to make a profit? It might take a while. E*Trade (Nasdaq: EGRP) on Monday beat estimates with a third quarter net loss of 10 cents a share, topping the loss of 12 cents a share predicted by First Call. But the company said it expects continuing losses.

Shares sunk 2 to 35 1/2 in initial trading Monday, down from a 52-week high of 72 1/4.

Net loss was $24.2 million for the quarter, compared to a profit of $5.1 million, or 3 cents a share, in the same period last year. The operating loss was 9 cents a share as E*Trade took a penny a share charge related to its acquisition of Telebanc Financial.

Revenue was $151.7 million, versus the $66.4 million in 1998's third quarter.

E*Trade anticipates continuing losses into the future as it continues an aggressive marketing campaign to become the global leader and recognized authority in electronic personal financial services, the company said in a release.

E*Trade Group Inc added 332,000 new accounts in the quarter, and had 1.24 million total active accounts at the quarter's end, the company announced. The brokerage processed 80,600 trades a day in the quarter, up 177 percent from 29,200 a day in the same period in 1998.

Agreements for two strategic acquisitions, Telebanc Financial Corporation and TIR Holdings, are "moves support (E*Trades's) strategy to deliver a superior value proposition and customer experience by executing in four critical areas: building our brand franchise, diversifying our range of products and services, developing our infrastructure and building our digital financial media capabilities." said chairman and chief executive officer Christos M. Cotsakos in a company release.

Costakos said he believes these are the four areas which can bring E*Trade above heritage and online brokers, such as profitable competitors Charles Schwab Corp., (NYSE: SCH) which posted a record second quarter, and Ameritrade Holding Corp. (Nasdaq: AMTD) which also beat third quarter expectations.

E*Trade also surprised second quarter results on the upside, though the company isn't expected to achieve profitability until the second Quarter of the year 2000, according to First Call.