Updated from 8:44 a.m. EDT

Online broker Ameritrade ( AMTD) reported a 25% gain in year-over-year earnings Tuesday, sending shares up more than 12%.

The Omaha-based brokerage earned $62 million, or 15 cents a share, in its fiscal third quarter, compared with $49.9 million, or 12 cents a share, a year ago. The results were in line with analysts' estimates. Looking ahead, the company reaffirmed fourth-quarter earnings of between 10 cents and 22 cents a share, on revenue between $166 million and $290 million.

"This is the third best quarter in Ameritrade's history," said Chief Executive Joe Moglia on a conference call. "When you look at earnings, they are up 25% versus the same quarter a year ago and up 163% year-to-date versus where we were a year ago, and we did that despite client activity rates being down about 6% from the same quarter last year."

Ameritrade, which has fallen sharply this year amid a decline in trading activity and on speculation that Moglia might retire, rose 12%, or $1.16, to $10.55. Competitor Charles Schwab ( SCH) was also higher after announcing the resignation of its CEO David Pottruck and hinting that it might divest certain units . Meanwhile, E*Trade ( ET) advanced ahead of its earnings due after the bell Tuesday.

In an interview with TheStreet.com, Moglia said he would make a decision about whether or not to retire in the fall. He also said the firm has no interest in acquiring businesses that Schwab may be looking to sell.

"At Ameritrade, we have a focused business model that deals primarily with brokerage," Moglia said. "That has served us very well. We wouldn't have much of an interest in Schwab's properties."

At current levels, Moglia said Ameritrade represents a compelling value, and the company is still interested in buying back its own shares. Since September 2002, Ameritrade has repurchased almost 40 million shares and is authorized to purchase another 30 million. In the third quarter, Ameritrade bought back 9.6 million shares.

While the earnings numbers were in line with analysts' expectations Tuesday, revenue figures were disappointing.

Net revenue totaled $220 million, up 17% from a year ago but well below what analysts were expecting. The average forecast called for Ameritrade to generate $231.8 million in revenue, with some analysts expecting revenue to reach as high as $260 million in the quarter.

The disappointing news on the revenue front stemmed from a 6% decline in the activity rate of Ameritrade's customers, many of whom are daytraders. The activity rate, a measure of trading volume in an average account, fell to 4.7% from 5% a year ago.

The decline in trading activity is reflected in commissions and stock clearing revenue, which rose just 5% from last year to $136 million.

Stock trading by individual investors has been slumping the past several months as unease grows about the strength of the economic recovery.

The brokerage's biggest revenue gains came in the interest category, which includes revenue generated from customer margin accounts, or loans to make stock purchases. Interest revenue rose 49% to $64.5 million in the quarter.

Total expenses rose 10% to $117.9 million. Ameritrade reported average client trades per day of about 164,000 in the quarter, and the company said trades are averaging 135,000 per day so far in July.

Although analysts say trading activity will probably remain sluggish over the summer months, they remain positive on the stock after recent weakness.

"We continue to believe that Ameritrade is well positioned to capitalize on the rebound in retail trading activity given its high operating margin," said Credit Suisse First Boston analyst Doug Harter.

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