|
NDB warns of 1Q loss
|
 |
September 8, 2000: 2:37 p.m. ET
Net brokerage blames increased costs for shortfall; Shares tumble
|
NEW YORK (CNNfn) - Shares of National Discount Brokers Group Inc. dropped 25 percent after the company said it expects to post a loss in the first quarter of fiscal 2001, a far cry from the profit Wall Street analysts had expected.
Shares of NDB dropped $7.81 to $28 in afternoon trading.
The Jersey City, N.J.-based online brokerage said it expects to report a loss of between 6 cents and 9 cents a share when it reports earnings on Sept. 26. First Call, which polls analysts for their expectations of company earnings, expected the company to post a profit of 9 cents a share.
Click here for latest earnings warnings
NDB (NDB: Research, Estimates) said its loss was due to a 34 percent increase in expenses compared with the same quarter in fiscal 2000, combined with lower revenue due to "adverse market conditions." These costs arose from a 35 percent increase in staff size and higher clearance and execution charges arising from higher trading volume, NDB said.
NDB Chief Financial Officer Daniel Fishbane said expansion costs were expected but revenue was hurt by a familiar summertime lull.
"Summer in general is relatively slow," Fishbane said. "Last year revenues were down [for the same quarter] and people go on vacation, so lots of top people are out."
But he was optimistic the company would bounce back.
"If we didn't have quarters like this it would be a little weird," Fishbane said. "I would be suspect of our accounting system."
He said the company was a little surprised at such a harsh reaction from Wall Street, but NDB does not give much weight to swings from momentum players.
Eva Radtke, an analyst with Prudential Securities, said the company is being tight-lipped on the breakdown of the revenue shortfall, making an assessment of the situation difficult.
"It may very well be a seasonal blip," Radtke said, "but without any guidance it's really hard to tell."
According to Radtke, NDB tends to closely guard its financial information, which is why analyst expectations often diverge. Expectations for the first quarter of fiscal 2001 compiled by First Call ranged from earnings of a penny to 26 cents. 
|
|
|
|
|
 |
|
