Online brokerage E*Trade today joined the legion of content sites "going portal."
The firm launched its long-awaited "Destination E*Trade" site, as expected. Most notably, E*Trade broke away from the pack of brokerages offering services online by opening up "90 to 95 percent of the site's functionality to noncustomers," according to Rebecca Patton, senior vice president of advanced products for E*Trade.
Most Net brokerages, such as Charles Schwab, Fidelity, and Donaldson, Lufkin, & Jenrette's DLJ Direct, offer extensive resources for online investors, including real-time quotes, analyst research, charts, and aggregated financial news. But those services are available only to those who open accounts, which involves a financial investment by users.
E*Trade is looking to tap into the market of Net users who are seeking financial data online "but haven't taken that next step and opened an online account," Patton said, citing outside research that concluded roughly 10 million people use the Web for financial data but are not yet trading online.
Scott Appleby, a senior analyst with ABN AMRO, gave "positive marks" to both E*Trade's new site and its overall strategy.
He said the firm has "a nice brand, but frankly, its growth has slowed. So they need to do something to boost growth.
"I think this is the best route they can take," he added. "Now it just remains to be seen whether they'll be successful."
Other content sites also have joined the portal race, looking to attract the massive traffic enjoyed by traditional Net gateways such as Yahoo and Excite. CBS SportsLine, for one, offers an array of add-ons such as free email and stock quotes.
Patton said E*Trade is not looking to compete with the likes of Yahoo, which she sees as a more general Net gateway, though the firm does have a button on its front page to help users who want to make it their home page. Rather, she said E*Trade wants to be the hub for all online users seeking financial information. The firm is counting on the idea that many of them will go on to open an account with E*Trade instead of one of its Net brokerage competitors.
E*Trade has spent the last few months beefing up its offerings and expanding internationally amid ever-growing competition in the online investment space. A study released last month by investment services firm Piper Jaffray predicted that online brokerages will spend more than $500 million during the next year to advertise Net trading services, especially as banks and full-service brokerages increasingly begin to offer their services online.
Indeed, E*Trade has spent its fair share of cash and stock recently in its effort to remain a player in the Net brokerage game. For example, the firm announced in July that it would acquire financial services firm ShareData for $30 million in stock. That acquisition was completed today. In June, the firm joined DLJ Direct and Waterhouse Securities in deals with America Online, in which the brokerages each will pay AOL $12.5 million per year for two years for prominent placement within the online giant's financial areas.
Last month, E*Trade warned that it could post losses through fiscal 1999 due to projected heavy spending on promotion. The announcement came in spite of a $400 million investment in the firm from Softbank, announced in July.
But Patton said the spending will continue in E*Trade's quest to compete. She said the firm has $600 million in cash, which it plans to use as "a vehicle for us to make acquisitions" in the future, though she declined to give further details.
At an event to launch the new site, E*Trade president and chief executive Christos Cotsakos said the firm plans to spend more than $100 million on a marketing campaign that will include broadcast, print, and online media.
Among the free resources available as of today on the public E*Trade site are: headline news from Reuters, market analysis from Briefing.com, company reports from Baseline, charts from BigCharts, earnings estimates from Zach's, and mutual fund information from Morningstar, Patton said.
The firm also introduced free email to its public site; a service it previously offered only to subscribing customers. Though there have been many concerns with the security of free email services of late, Patton said E*Trade's email offering, powered by Critical Path, is based on the Secure Socket Layer (SSL) encryption system. Users have to register on the site to use the free email service, but they don't have to open an account, Patton added.
E*Trade also unveiled its chat feature, which had faced criticism from regulators and other industry watchers. Patton said chat is part of the community atmosphere the firm is looking to drum up, and enhances other such offerings on the site, including "instant polls." Users also must register--but not open an account--to access those features.
The Net brokerage said it currently receives about 2.2 million page views per day. It said it processed an average of $1.5 billion in customer transactions during the quarter ended June 30, and noted that it has updated its technology infrastructure in anticipation of expected traffic increases from the launch.