Updated from 11:24 a.m. EDT
Online broker and
National Discount Brokers Group
( NDB) Tuesday said it lost 6 cents a share during its fiscal first quarter ended Aug. 31. The loss was expected.
On Sept. 6, NDB shocked the market with
news that it would post a loss of 6 to 9 cents for the period, due in part to adverse market conditions during July and higher spending on employees. The stock dove 22% that day but in subsequent weeks recovered.
Tuesday's release included a few more details about that loss, including the fact that the market-making unit, which matches buy and sell orders, had technology problems for several days in July, cutting into trading revenue.
Tuesday the stock was off $1.50, or 5%, at $30.50.
Jersey City, N.J.-based NDB said customer accounts rose to 268,900, including 23,300 net new accounts. That's only a fraction of industry leader
( SCH) more than 4 million online accounts.
NDB said that revenue came in at $68 million, up from $53 million in the year-earlier quarter. The bulk of that came from its market-making unit, which contributed $46.4 million. But that number was lower in July than the company would have liked because of the technology disruptions, and missing out on what it termed market opportunities. The online unit put in only about $20.1 million in revenue, including commissions and payment for order flow from the market-making unit. (Market-making firms pay brokers to send them orders.)
Meanwhile, expenses rose at the online and market-making units, with compensation costs weighing on the latter. But overall, it was the market-making unit that kept NDB from a deeper loss, as it posted pretax income of $8.7 million, compared with
pretax loss of $7.2 million.
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