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My thoughts on Etrade

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June 09, 2009 – Comments (1) | RELATED TICKERS: ETFC

I'm just repeating my pitch on Etrade.

E-trade was one of the first companies to recognize their banking problems and work to resolve them. They sold off some of their assets and focused on their core business. The obtained private financing before TARP was even thought of.  Despite constantly being dogged by the media they launched an agressive ad campaign to bring in more business. They introduced online trading into the Smartphone world with Etrade Mobile. Just based on these effort alone I would like this company to succeed.

However, Etrade still has massive amounts of debt. They still have alot of bad assets on their books. Etrade is teetering on the brink of having inadequate capital to remain a brokerage may get taken over by the OTS. Etrade was completely snubbed by the government's TARP program (wasn't big enough to fail you know). **Note to self: elect Etrade board member to Congress. End note** Therefore Etrade may be forced to dilute current shareholders in order to raise enough capital to stay in business. With the share price hovering at $1.50 per share, thats alot of dilution.

As much as I would like to see Etrade succeed, with the government deciding the winners and losers, its hard for a company like Etrade to compete. I wish Etrade well, but if things dont improve by the end of the year I will have to take my losses and move on.

1 Comments – Post Your Own

#1) On June 09, 2009 at 5:50 PM, binve (< 20) wrote:

outoffocus. Good post. I agree. I too want etrade to succeed. I like their strengths and recognition of the problem early. But their weaknesses are very bad. I wish them very well (and you too with your investment).

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