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TD Ameritrade Misses Estimates

TD Ameritrade shares were sinking 4% as the market opened after the online brokerage firm said profit fell last quarter.



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TD Ameritrade

(AMTD) - Get TD Ameritrade Holding Corporation Report

shares dropped nearly 4% after the online brokerage firm said profit fell last quarter and missed analysts' estimates.

The online brokerage firm reported net income of $114 million, or 20 cents a share, for the three months ending September 30 that represents its fiscal fourth quarter. Net income was down 27% from the comparable quarter in 2009 and missed estimates by 3 cents a share.

TD Ameritrade's net revenue also fell 7.5% to $608.8 million, missing revenue estimates of $619 million. The company said more than half of its revenue came from asset-based fees as opposed to transaction-based revenue.

TD Ameritrade's full-year net income totaled $592.2 million, or $1.01 a share, down 8% from its fiscal 2009 results.

The online brokerage firm also announced a 5-cent quarterly cash dividend, which will be payable to common shareholders on record as of December 1. TD Ameritrade offered full-year earnings guidance for 2011 between 90 cents and $1.20 a share.

"We are proud of how we have executed over the last two years," TD Ameritrade CEO and president Fred Tomczyk. "I can't think of another company that has delivered the kind of organic growth we have, and received a credit ratings upgrade, refinanced their debt through a successful public offering, bought back 9% of their outstanding stock, made an acquisition and introduced a dividend - all within a 24-month period that included the deepest and longest recession since the Great Depression."

TD Ameritrade, like its online rivals,

Charles Schwab

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E*Trade Financial (ETFC) - Get E*TRADE Financial Corporation Report

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, saw reduced trading volumes during the quarter as retail investors stepped back from the markets.

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TD Ameritrade's average daily client trades or DARTs, per day last quarter totaled 317,684, down 23% from 410,576 DARTs in the year-earlier quarter.

TD Ameritrade said net new assets totaled $6 billion, up 7% on an annualized growth rate.

Online brokers are not only battling lower trading volume but the continuing low interest rate environment. TD Ameritrade's CFO Bill Gerber said the company's completion of a cash management strategy earlier in the year "helped us mitigate pressure from the low interest rate environment and increase asset-based revenues by 12% year-over-year."

The firm expects "significant earnings upside" once rates rise, he said.

TD Ameritrade's shares at last check sunk 3.7% to $16.13. E*Trade shares were falling 1.5% to $13.81, while Schwab's stock fell 0.7% to $14.90.

--Written by Laurie Kulikowski in New York.

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Laurie Kulikowski


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