E*Trade Group Inc, the on-line trading and investment services company based in California’s Palo Alto, reported rapidly expanding revenues and earnings or its third quarter. However, the company warned of a huge increase in budgeted expenditure aimed at grabbing market share will bring losses over the next few quarters. Third quarter net profits were up 114% at $6.6m while revenues were up 68% at $62.3m. E*Trade’s CEO, Christos Cotsakos, said the financial performance was the result of a surge in activity on our web site, which caters for the rapidly expanding on-line trading community. E*Trade now claims its site is among the top ten financial sites on the web, based on figures from Media Metrix Inc. The company also claims new subscriber accounts added in the quarter of 56,000 brining total subscriber numbers to 459,000. Although E*Trade is still some way behind the biggest on-line brokerage Charles Schwab. But Cotsakos said his company was about to flex its new-found financial muscle following a $400m investment by Softbank Corp which took a 27.2% stake in exchange for the cash. E*Trade is planning a huge binge on marketing, strategic acquisitions and technology upgrades to raise its brand awareness and to cement early customer loyalty in this expanding market. This, Cotsakos warned, will lead to financial losses for the near term through the next several quarters. E*Trade is in the process of upgrading its web site into what it hopes will become a fully fledged financial ‘portal’ site offering chat rooms, institutional equity research and a host of other related financial services. In so doing, E*Trade hopes to raise itself above the plethora of other on-line brokers, and to make it more difficult for competitors to emulate the service offering without investing similar amounts. But technology problems have pushed the site’s launch date back to September from initial plans to launch in July.
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