Online Trading Might Suffer Summer Slump
Last summer, online-brokerage firms ducked a weak seasonal trend. This year, they may not get so lucky.
That raises the possibility of a trading slowdown that could run through the summer -- or perhaps even longer. And even as it faces the prospect of reduced business, the online-trading industry continues to be intensely competitive, as evidenced by Charles Schwab Corp.'s recent move to lower its trading fees. For Schwab, the lower prices may mean some short-term pain in the form of reduced revenue.
While trading volume during the warm-weather third quarter often slows from the second quarter's pace, that wasn't the case last year at three big financial companies with online-trading units. Instead of posting the typical declines, Schwab, E*Trade Financial Corp. and Ameritrade Holding Corp. all saw trading volume climb. The activity was spurred by investors' improved sentiment that made 2003 the year that snapped the stock market's losing streak.
This year may revert back to the historical norm. Trading is expected to fall from the second quarter to the third, said analyst Richard Repetto of Sandler O'Neill & Partners. Added Joe Moglia, Ameritrade's chief executive: "I think that there's a reasonable chance that there might be a slowdown."
The shaky geopolitical situation, such as the less-than-stable conditions in Iraq, is cited as the trigger for a slowdown in trading. "You cannot open the paper without seeing something negative," said Mr. Moglia. He said the toll that the stream of bad news takes on investors' psychology may cause individuals to step back from investing.
But while a summerlong slump would be one thing, a slowdown that lasted into the fall would be quite another. And yet that is a possibility, due not only to the uncertainty over Iraq and the war on terror but also to the questions raised by what is shaping up to be a tight U.S. presidential contest.
"It wouldn't surprise us to see a slowdown in investor activity," said David Pottruck, Schwab's chief executive. "My guess is that things will be difficult between now and November and hopefully start shaping up following the election."
It's against that uncertain backdrop that Schwab has decided to lower trading fees across an array of client categories. The San Francisco company is betting that any short-term pain -- Schwab is bracing for a potential drop of 2% to 3% in consolidated revenue during the year after the cuts are implemented -- will eventually be offset by a pickup in business. In the meantime, Schwab is looking to control expenses through hiring restrictions.
For now, investors appear more focused on the negative effects of the price cuts, as Schwab shares fell as much as 8.4% after the new prices were announced last week. But Mr. Pottruck said the company's perspective extends beyond one day's market activity. "It doesn't take very long to make up the reductions with increased business," he said. "We operate for the long term. The short-term give-up is well worth it in the longer run."
Whether Schwab's cuts move its rivals to react remains to be seen. Shares of E*Trade and Ameritrade also fell following Schwab's move, out of what Mr. Repetto said may be concerns over further price cuts in the industry. A spokeswoman for Ameritrade said Schwab's move "really doesn't change our strategy as a whole," and an E*Trade spokeswoman declined to comment on it.
Mr. Repetto, who doesn't own shares of E*Trade, Schwab or Ameritrade, said he didn't think there would be a price war because the Schwab price cuts simply bring the firm more in line with less-expensive offerings from its rivals. (Mr. Repetto's firm said it has done investment-banking work for E*Trade and Ameritrade and "expects to receive or intends to seek" investment-banking compensation from Schwab in the next three months.)
But one thing's for certain: Even after a string of mergers has thinned the competitive field, pricing remains paramount in online trading. "Our competitors have increasingly raised the profile of price," said Mr. Pottruck. Investors often stay with Schwab because they like the company's service, "but the entry point is often one of simple price competition."
Any prolonged slowdown would deal a blow to the Web brokers, which just recently had been recovering from the three-year market downturn that ran from 2000 through 2002. Sparked by the pickup in business, the shares of Schwab, Ameritrade and E*Trade rose, setting 52-week highs in October, January and February, respectively. But more recently, the stocks have languished, with all three off sharply from recent peaks.
During the industry's difficult streak, online trading underwent a period of consolidation. Ameritrade was a big player in the process, notably through its acquisition of the Datek operation. If further consolidation came, Mr. Moglia said Ameritrade would be "aggressive" in ferreting out possible deals.
The three companies' business models vary, which could play into how they would fare in any downturn. E*Trade and Schwab have pursued more-diverse businesses than Ameritrade, which has focused more on online trading. By building a banking and mortgage business, E*Trade officials think they have created a good leg to support the company at times when the brokerage business slumps.
网上经纪公司或面临低潮
去年夏天，网上经纪公司躲过了一个疲软的季节性趋势。但今年，他们恐怕不会有那么有运气。
这种季节性趋势可能使网上证券交易整个夏季增长放缓，并且甚至持续更长时间。但即便如此，这个行业的竞争仍然非常激烈，这从嘉信理财(Charles Schwab Corp.)最近调低交易费的举措可见一斑。对于嘉信理财来说，调低收费可能意味著一些短期的阵痛，如收入减少。
虽然气候温暖的第三季度交易量的增长往往较第二季度慢，但三大拥有网上交易业务的金融公司去年的情况并非如此。
嘉信理财、E*Trade Financial Corp.以及Ameritrade Holding Corp.去年第三季度并没有报告交易量下降，三家公司的交易量反而是有所攀升。交易活动增加是因为投资者人气的改善，并使美国股市2003年改变了跌势。
今年可能又会回到历史常态。Sandler O'Neill & Partners的分析师理查德?利贝托(Richard Repetto)说，第三季度的网上交易量可能将低于第二季度。Ameritrade的首席执行长乔?莫格利亚(Joe Moglia)说，“我认为，交易量增长放缓是有可能的。”
动荡的地缘政治局势，譬如伊拉克局势不稳，是交易增长放缓的主要原因。“你打开报纸时，看到的无不是负面的消息，”莫格利亚说。他说，不断涌现的坏消息抓住了投资者的神经，这可能抑制个人投资者的投资。
交易低迷的状态延续一个夏季是一回事，但如果这种势态延续到秋季那就是另一回事了。这也是不无可能的，伊拉克战争和反恐战争就有风险，激烈的美国总统大选还会带来新的不确定性。
“如果投资者活动减缓，我们不会觉得意外的，”嘉信理财的首席执行长大卫?波特拉克(David Pottruck)说。“我猜想，从现在到11月期间情况会较为困难，但大选后很可能会好起来。”
与这个不确定背景形成对比的是，嘉信理财降低多种客户类别的交易费。这家总部在旧金山的公司相信，短期的阵痛最终会因业务增长而被抵消。嘉信理财在调低收费后的这一年中，合并报表收入可能会下降2－3%。与此同时，嘉信理财还在力图通过限制招人来控制费用。
到目前为止，投资者似乎更多是关注收费降低的负面影响，嘉信理财调低收费的新闻上周宣布后其股价下跌了8.4%。但波特拉克说，公司的前景不在于某一天的市场交易状况。“业务增加后弥补收费降低的损失并不需要很长时间，”他说，“我们的经营是长期的。短期放弃些东西对长远经营来说是值得的。”
嘉信理财的调低收费的举措是否会触发竞争对手的反应目前还不得而知。在嘉信理财宣布降低收费后，E*Trade和Ameritrade的股票也双双下跌，利贝托说，这可能是因为市场担心该行业将进一步降低收费。Ameritrade的发言人说，嘉信理财的举措“的确不会改变我们整体的战略，”E*Trade的发言人拒绝置评。
利贝托说，他认为并不会爆发价格战，因为嘉信理财降低收费只是让它的收费更接近其竞争对手相对较低的收费水平。利贝托不拥有E*Trade、嘉信理财或Ameritrade的股票。（他的公司称，它曾为E*Trade和Ameritrade做过投资银行工作，并在未来三个月“将收到或希望寻求得到”嘉信理财的投资银行业务的给付。）
但有一点是肯定的：即便一些兼并交易缩小了行业竞争的范围，但定价依然是网上交易的重大问题。“我们的竞争对手越来越多地在价格上做文章，”波特拉克说。投资者往往留在了嘉信理财是因为他们喜欢该公司的服务，“但第一要素往往就是价格竞争。”
只要交易低迷状况持续更长时间，网上经纪公司都会遭受打击，这些公司刚刚从2000年到2002年这三年的股市下跌市况中恢复过来。由于业务增多，嘉信理财、Ameritrade和E*Trade的股价纷纷上扬，分别在10月、1月和2月达到了52周高点。但最近，这些股票表现疲软，三只股票较近期的高点大幅下挫。
在网上经纪行业的困难时期，网上交易经历了一个整合期。Ameritrade是整合过程中的最大玩家，它收购了Datek。如果该行业进一步整合的话，莫格利亚说Ameritrade将“积极”促成可能的合并交易。
这三家公司的业务模式各不相同，这也将决定他们如何度过市场增长放缓。E*Trade和嘉信理财的业务比Ameritrade更多样化，后者则主要专注于网上交易。通过建立起银行和抵押贷款业务，E*Trade的管理人士认为，他们已为公司创造了一个在经纪业务疲软时支撑公司的一根支柱。
