Another SELL For ETrade (ETFC): How to Destroy a Co

E*Trade’s management has put on an excellent demonstration of how to destroy a company in five short months:

  1. Make insanely risky portfolio bets
  2. Announce that you’ve lost so much money you’re not even sure how much you’ve lost
  3. Denounce a sceptical analyst as “irresponsible” without providing any details
  4. Shed exactly one employee (the CEO)
  5. Sell half the company’s equity at a fire sale price–but don’t raise enough cash to solve the problem.
  6. Watch helplessly as other analysts join the downgrade parade.

Bank of America’s analyst predicts E*Trade is headed to $2, in part because the company’s brokerage brand has now been damaged. Reuters:

BofA analyst Michael Hecht believes negative value at E*Trade cannot be offset by the retail brokerage business, which he said was a dwindling asset.

Hecht expects the best-case scenario for E*Trade to be another $1 billion addition to its reserves, while the worst case would be a continued fire sale of assets resulting in an outright sale of the company’s home equity portfolio.

See Also: Current Cost of E*Trade’s Screw-Up: $9 Billion and Counting

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