E*Trade’s (ETFC) Q1 sales dropped and its net loss exceeded Wall Street’s expectations, but management is arguing that its turnaround plan is working, and the market is buying it: Shares are up 10% after hours. Management admits we’re in a “modest recession” and vows to cut risk, strengthen its balance sheet, and cut compensation costs by 10% — which we read as firing 10% of the company.
E*Trade posted $316.2 million in Q1 revenue, down 51% year-over-year and missing the Street’s $363.9 million consensus by 13%. The company lost $91.2 million during Q1, or 20 cents per share, widely missing the Street’s expected 10 cents per share loss.
“Management has also revised its view of the economic and market outlook since the fourth quarter earnings call in January, and assumes the now-consensus view that the U.S. has entered into a modest recession,” the company said in a statement.
How will E*Trade crawl back to life after losing its shirt in the mortgage market? One answer: More restructuring. The company plans to cut annual “compensation-related expenses” by 10%, mostly during Q2. We assume this means E*Trade plans to cut 10% of its staff.
More good news: The company signed up 60,000 net new customers during Q1, the biggest increase since Q4 2005.
More in the release, which includes a laundry list of restructuring initiatives.
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