E-Trade shares slip after broker posts 4Q loss

BOSTON (AP) -- Shares of E-Trade Financial Corp. slipped on Friday after the online brokerage posted a wider-than-expected quarterly loss as low trading volume and one-time charges cut into its results.

THE SPARK: E-Trade said after the market closed Thursday that it lost $186.1 million, or 65 cents per share, in the fourth quarter. Analysts surveyed by FactSet, on average, expected an adjusted loss of 54 cents per share.

E-Trade's 128,000 daily average revenue trades in the fourth quarter were down 9 percent from a year ago. That drop contributed to a nearly 2 percent decline in overall revenue.

The latest quarter's result included a pretax charge of $257 million, or 59 cents per share, from a move to refinance $1.3 billion in debt. E-Trade also recorded a charge of $38 million, or 13 cents per share, related to a change in California tax codes.

THE BIG PICTURE: E-Trade is among the brokerages that have recently seen trading revenue decline amid low stock market trading volume. Trading was light during much of the fourth quarter as investors worried about the November elections and the so-called "fiscal cliff" negotiations between Congress and the White House.

THE ANALYSIS: Sterne Agee analyst Jason Weyeneth said in a research note that he continues to view E-Trade favorably, and he maintained a "Buy" rating on the stock while slightly raising his earnings estimates for this year and 2014.

Weyeneth attributed the wider-than-expected quarterly loss to the charge related to California's tax codes, and said that key measures of the company's operations "were largely in line or better than expected."

He noted that E-Trade continues to improve the health of its balance sheet. He also cited improving trends during December and early January in the amount of revenue generated by trades.

SHARE ACTION: E-Trade shares slipped 6 cents to $10.21 in midday trading, after falling as low as $9.87, or nearly 4 percent, in the opening minutes of the session. The stock has traded in a 52-week range of $7.08 to $11.50.