A spokesman for the company said most of the layoffs will come from call centers in Omaha, Neb., and Fort Worth, Texas, which the company actively staffed during the boom in online trading during the early part of 2000.
Ameritrade also said it expects to report losses on Jan. 17 of 12 cents to 14 cents per share. Analysts polled by First Call expected a loss of 5 cents per share on revenue of $127 million to $132 million. The company also plans to take a $1.5 million charge in the first quarter because of the restructuring, Ameritrade spokeswoman Donna Kush said.
Analysts say they are not surprised by the layoffs. With the Nasdaq ending down 39 percent in 2000, battered retail investors have been trading less frequently.
"These newer investors are getting their clocks cleaned by the sell-off in tech stocks; they don't necessarily have the assets to maintain active trading," said Eli Neusner, an analyst with MetaMarkets.com. "They're probably going to head to the sidelines for a little while."
The 230 full-time employees laid off represent 9 percent of the company's 2,500-employee work force, Kush said.
Shares of Ameritrade fell $1.03, or nearly 12 percent, to $7.81 in afternoon trading on the Nasdaq. Since the beginning of 2000, the stock has tumbled 62 percent.
Ameritrade isn't the only online brokerage firm facing difficulties. E*Trade's stock has fallen 65 percent since the beginning of 2000, and today, Morgan Online, a private banking site for J.P. Morgan Chase, said it will lay off some 150 employees, The Wall Street Journal reported.
In addition, Charles Schwab instituted a hiring freeze last month and said it would freeze the salaries of its top executives.
Online brokerage accounts experienced a meteoric jump in their customer bases during the bull run in the stock market . Interest was so strong that in the first quarter of 2000, individual investment accounts topped $1 trillion for the first time, according to a report by U.S. Bancorp Piper Jaffray.
"Everybody was making money in the market and everybody was saying, 'Well, I'm going to try it too,'" said Shaw Lively, an analyst with IDC.
Online brokerages launched massive marketing campaigns and embarked on hiring crusades to meet customer service demand. With a cooled market today, these firms have been stuck with a glut of call center employees.
In Ameritrade's case, the company has been pouring money into a new initiative, OnMoney, which aims to act as a self-service site for the individual investor. Given this pull on its resources, along with marketing costs, Salomon Smith Barney analyst Matthew Vetto said the layoffs were a prudent decision.
Analysts suspect other online brokerages may be forced to follow Ameritrade's lead and lay off some employees, but online trading is here to stay.
"The cost of trading on the Web is considerably less than the alternatives, and it is a superior experience," Vetto said.