Ameritrade beats 3Q estimates

The online brokerage Ameritrade Holding Corporation (Nasdaq: AMTD) said Monday that third quarter earnings were $8.9 million or 5 cents a share, two pennies above First Call's estimate of 3 cents a share.

Shares skipped up 3/16 to 38 5/16 Monday morning, still well below a 52-week high of 62 3/4.

Earnings for the third quarter of 1999 were far ahead of the $5.9 million or 3 cents a share earned in the same quarter of 1998. Revenue for the third quarter was $78.1 million, a 97 percent increase over the 1998 quarter, and a 23 percent increase over the second quarter of 1999.

An increase in trades per day and new accounts were cited as the cause of Ameritrade's surprise earnings. The company opened 84,000 new accounts in the third quarter, and recorded a total of 505,000 core discount brokerage accounts as of June 25, a 89 percent increase from the 1998 quarter.

Ameritrade also made more trades. Ameritrade averaged 59,648 trades a day in the third quarter of fiscal 1999, a 179 percent rise over the same quarter in 1998. Assets in customer accounts were $22.6 billion, up 100 percent from the same period in 1998, according to the company release.

Ameritrade more than doubled its advertising expenses in the third quarter, which were $12.1 million, compared to $5.2 million in the same quarter in 1998. The rise in pre-advertising net income before taxes more than made up for the new expenses, up 79 percent from the 1998 quarter, at $26.0 million.

"We have increased both customer accounts and customer assets while continuing to strengthen our brand position through our advertising efforts and build our infrastructure to support even higher levels of customer activity," said Tom Lewis, the Company's Co-Chief Executive Officer in a company release.

Ameritrade competes with E*trade Group Inc., (Nasdaq: EGRP) which has experienced setbacks from power outages despite major marketing campaigns. Ameritrade and Ebay were both driven up by analysts reports last April. E*trade shares closed down 1 7/16 at 39 3/4 Friday.

Three out of 9 analysts covering the stock rate Ameritrade a strong buy, according to Zach's Investment Research.