Ameritrade Profit Jumps, Open to New Deals

NEW YORK – Online broker Ameritrade Holding Corp. (AMTD) Tuesday said quarterly profit rose 21 percent as higher interest income and lower expenses offset a decline in revenue from commissions and clearing fees.

Ameritrade, which has agreed to acquire rival TD Waterhouse USA from Toronto-Dominion Bank (search), also reaffirmed its hunger for further deals or tie-ups.

"There's no reason why we couldn't do another deal fairly quickly if we thought it made sense," Chief Executive Joe Moglia told Reuters. He said doing another deal within a year was a possibilierest income is a key source of revenue for discount brokerages.

Revenue on commissions and clearing fees slipped to $113.1 million from $136.2 million. Such revenue has been on a downtrend industrywide amid a fall in trading by individual investors and increased competition among brokers.

For the fourth quarter, Ameritrade reaffirmed its forecast for earnings of 18 cents to 23 cents a share but said the mix of earnings would change. It expects reduced income from trading activity but increased interest income.

The company narrowed its full-year earnings projection to a range of 75 cents to 80 cents per share, compared with analysts' average forecast of 76 cents.

Ameritrade said that during the third quarter its average client trades per day, known as DARTs, totaled about 139,000, down from 164,000 a year earlier.

Analysts were pleased that DARTs rose in June from May. Richard Repetto, analyst at Sandler O'Neill & Partners, wrote in a note that June DARTs rose 8.3 percent from May, compared with his estimate for little change.

David Trone, analyst at Fox-Pitt, Kelton, wrote, "On balance, the big news is that June DARTs are higher than expected and up from May, despite June typically being seasonally lower."

The agreement to buy TD Waterhouse came after Ameritrade rebuffed two takeover approaches from rival E+Trade Financial Corp (ET).

Moglia said he expects further consolidation in the industry and would not rule out a deal with E+Trade.

"If there were an opportunity to do something with E+Trade, we would certainly be interested in looking at that -- but that would be true of anybody," he told Reuters.

He added, "Today there are about 95 firms that have online brokerage presences in the U.S., and about six or seven names that everyone knows. And I think that in three to five years from now those numbers will probably be cut in half."

Shortly after announcing the agreement with TD Waterhouse, Ameritrade said it planned to cut the companies' combined work force from 4,400 to 3,000 within about 18 months. The deal would produce savings of $578 million, Ameritrade reiterated.

Ameritrade shares were up 15 cents at $19.06 on Nasdaq.