prescient11

An Ameritrade-E*Trade Merger? Not as Crazy as It Sounds

Why hasn't the author addressed the fact that the TARP plan means the losses are a wash for any potential acquirer.

I mean, would you rather pay taxes or use that money to acquire a competitor and offset losses.

How can any fool think that $4-5 would be reasonable. Aside from all the conspiracy theorists that post here and elsewhere, ANSWER THAT QUESTION OR JUST SHUT UP.

If I can hear one reasonable answer to that point, then they would have a point. If not, they are just liars.

The TARP program gives a potential acquirer a loss-free (due to tax credits), debt-free (Etrade has free cash to pay down all debts just about) brokerage.

So, what is a debt-free, loss-free, perfectly healthy Etrade worth? $4-5/share. I think not.

An Ameritrade-E*Trade Merger? Not as Crazy as It Sounds

One other point, due to the TARP program, an acquiring company would be able to pull Etrade's losses out and use them as a tax credit for the next couple of years. Thus, Etrade's expected future mortgage losses ARE A WASH because the acquirer would just be paying that in taxes anyway.

So they can acquire Etrade without worrying about mortgage losses. Further, Etrade has enough cash on hand at the bank $1.8B and at the parent $700M to pay off almost ALL OF THEIR DEBT.

So do the analysis, what is a debt free, no loss Etrade worth? It's got to be near $15 at a minimum. If AMTD could pull it off near $10 it would be a tremendous steal.

Then they might have a platform that runs without crashing all the damn time.

An Ameritrade-E*Trade Merger? Not as Crazy as It Sounds

AMTD had better raise their offer if they expect to seriously be able to buy ETFC. ETFC has $1.4B in free cash on hand. A $4 offer would represent $2B roughly and would be a joke.

No, about $8-10 might do it, but $4-5 would not get it done. You are aware that Etrade's CEO, Donald Layton, spent $1M of his own money to buy Etrade shares at $4.07.

The merger makes sense, but at $4-5 it makes no sense.

Metrics, Mortgages and Analysts

The real expert,

Explain what you mean by risk factors and I'll let you know if I agree or disagree. I vehemently disagree about the "massive dilution" you reference, by the way.

Metrics, Mortgages and Analysts

The real expert,

We'll see won't we. I'll remember this come 1Q of '09 and we can see whose call was right.

So rather than listen to your blathering Monday morning quarterbacking about oil, etc. How about you enlighten us as to your calls that will take you to 1Q of '09 and we compare then, shall we?? I believe ETFC will yield a 200% gain by then.

We await your genius.

Metrics, Mortgages and Analysts

Wez, nice retort, as informative as your first.

Metrics, Mortgages and Analysts

Wez, really, how stupid can you be? Do you actually engage in analysis or spout off random thoughts only? Etrade has an extra $1B in cash just sitting around, in case they haven't provisioned enough. That is a HUGE cushion that can absorb any further blows.

Who said Etrade is immune? Stop constructing straw men. Etrade's stock price has been destroyed because everyone assumes they will get hit very hard. So think before the next time you write, for all of us.

Speculator, your analysis is about as good as Wez's. Thanks for your self-promoting non-analysis.

Why the E*Trade Shorts Have It Wrong

Jk12,

How is ETFC undercapitalized? Do people actually do research anymore? Tier 1 risk capital ratio is 12.4%. That is the same as JPM and better than WFC. After the 2Q, I would wager that you will not find one large bank with a better capital ratio than Etrade.

Second, what toxic mortgages are you referring to? No subprime (1/5 of 1%), no option arms, no interest only loans, etc., etc.

HELOCs are in line with risk estimates. First lien residential mortgages are fine. They are hurting earnings right now, but have no effect on the cap ratios.

So again, I ask you, what exactly are you referring to?

Know this and know it well, Etrade is as solid as a rock and only getting stronger from a balance sheet perspective. By the 2Q conference call, they will have a stronger balance sheet than any large commercial bank, guaranteed.

Why the E*Trade Shorts Have It Wrong

Egg,

Saying Citadel is well-positioned in case of bankruptcy is like saying you're well positioned in the basement when a tornado carries away your house.

It's amazing that such people have access to computer terminals.

Why the E*Trade Shorts Have It Wrong

There are some incorrect facts above, like the quarterly loss figure was larger than expected, but the author arrives at the right conclusion.

Riddle me this, does one really think that a company with $3/share of EXTRA CASH floating at both the bank and brokerage, should be trading right under $4.

This is one of the biggest manipulation plays out there, and the hedge funds have piled in. Let's hope that they are soon finished so that the stock can appreciate to a proper value.

Comparative Price Shopping: Selected Banking, Mortgage and Brokerage Stocks

Bravo, simply bravo. That's right folks. This is the first article to point this out. As Citigroup's "analyst" was yelling sell, sell, sell, Citigroup the company increased its position by over 600%.

Do as I say, not as I do. Retail investors get screwed yet again. Kudos for pointing this out Ms. Reed, kudos.

E*Trade: Primed To Turn Around?

Indeed, wonderful piece Ms. Reed. Two comments of yours need to be highlighted:

"E-Trade’s survival is no longer in question..."

Although they will work through the mortgage issues in time as you point out, they have a 12.4% cap ratio, as good as JP Morgan and better than Wells Fargo. And this will continue to get better as time goes on. Indeed, I would venture to guess by the next quarter you will not find another bank with a better cap ratio than Etrade, they are as solid as a rock.

"No reason exists for it to stay in at such a “depressed” $4 value."

This cannot be stated enough. And this was true before the conference call. Regardless, they will return to profitable quarters later this year, I believe 2Q, 3Q at the latest. The stock was comfortably in the $20s when they were earning 36 cents per share. Once these loan provisions are set aside, and the interest income goes directly back to EPS, the earnings may not equal 36 cents but I would imagine they will be near the 20s.

Absolutely no reason exists for them to be in the $4s. Or the $6s for that matter. Another quarter and they should be in the $8s, that's where the "Bhatia gap" exists.

Thank you for your time and effort in penning your article. Full disclosure - I too am an ETFC long.