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Ameritrade warns
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January 8, 2001: 4:30 p.m. ET
Online broker expects much wider 1Q loss, lays off 350 employees
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NEW YORK (CNNfn) - Online broker Ameritrade Holding Corp. warned Monday that declining revenue will cause it to post a much wider first-quarter loss than Wall Street had predicted.
The warning follows an earlier announcement that the company is laying off 230 full-time employees and about 120 temporary employees, all mostly at the company's call centers in Omaha, Neb., and Fort Worth, Texas. Ameritrade employs about 2,500 people.
Ameritrade spokesman Phil Nunes attributed the layoffs to the recent market volatility, which has affected a huge number of technology and e-commerce companies
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Omaha, Neb.-based Ameritrade (AMTD: Research, Estimates) said it now expects a loss of 12 cents-to-14 cents a diluted share in its fiscal first-quarter compared with analyst forecasts for a loss of 5 cents a share, according to earnings tracker First Call.
 The company also said it expects revenue of between $127 million and $132 million.
Ameritrade's problems are simply the latest in a swath of layoffs and profit warnings at Internet companies that have been hit hard by big cuts in advertising revenue.
A number of online financial and media-related sites, which depend heavily on ad revenue, have seen their numbers drop in recent months as stock market volatility has spurred companies to cut back on ad spending and personnel.
"There is a serious decline in the overall amount of advertising that's going to be spent overall," said Porter Bibb, a media specialist with Technology Partners, a financial advisory firm. "We're seeing it across the board."
Bibb cited companies' apprehension "that we may be heading into a recession" as reasons for trimming ad spending and employees. He cited the slowdown as a factor in last week's folding of George magazine, founded by John F. Kennedy Jr. who was killed in a plane crash last year.
Influential Merrill Lynch Internet analyst Henry Blodget said Monday that the slowdown in dot.com ad spending could be worse than originally thought, prompting him to cut his estimate for the online advertising market in 2001 to about $8 billion, or about even with a year ago.
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There is a serious decline in the overall amount of advertising that's going to be spent overall
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Porter Bibb
Media Specialist
Technology Partners |
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The drop in ad spending prompted New York Times Co.'s (NYT: Research, Estimates) Internet division, New York Times Digital, to announce Sunday it is laying off 69 employees, or 17 percent of its work force, because of declining revenue.
Standard Media International, parent company of the Industry Standard magazine, was also expected to announce 35 layoffs as early as Monday.
And more than half the employees at Morgan OnLine -- J.P. Morgan's private-banking Web site -- are getting cut, the Wall Street Journal reported Monday. But that's mainly because of the company's merger with Chase Manhattan in addition to difficulty trying to gain new customers on the Web, according to the Journal.
Shares of Ameritrade (AMTD: Research, Estimates) closed down 34 cents to $8.50 Monday. The stock is down more than 50 percent from its 52-week high of $25.17. 
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Ameritrade
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