Originally published on June 21, 2000 and brought to you today as a time capsule.
With competition for investment dollars heating up, two online brokerages are banking on free Internet access to bring in more business.
In separate announcements, Ameritrade (Nasdaq: AMTD) and Quick & Reilly said they will use 1stUp.com, an affiliate of CMGI, Inc. that provides other companies with private label Internet access, to make the service available to their respective customers.
Customers who are willing to put up with navigation bars on their screens will get unlimited Internet access, voicemail, 100 MB of online storage and 24-hour customer support, all free of charge.
The bar will include advertisements and links to brokerage’s Web site.
According to 1stUp.com president Charles Katz, the Ameritrade agreement is “the largest free Internet access offering to the financial services community.”
The company’s network covers more than 95 percent of the U.S. and Canada and provides Internet service for such search engines as AltaVista, [email protected] and Lycos.
Online brokerages saw record growth during the first quarter, as assets in accounts held by the firms topped US$1 trillion, according to a report issued last month by U.S. Bancorp Piper Jaffray.
While E*Trade is No. 1 in terms of growth, Charles Schwab & Co. is larger. Quick & Reilly, a unit of FleetBoston Financial Corp. (NYSE: FBF), has more than 1.3 million customers with assets of more than $41 billion.
In the Black
Ameritrade, though it does not do as much business as its larger rivals, is one of the few profitable Internet companies. The company earned $3.2 million, or 2 cents per share, in its second quarter ended March 31st, down from $8.1 million, or 5 cents, in the year-earlier quarter. The earnings were ahead of analysts’ expectations for a 4-cent loss. Revenue soared to $170.3 million from $63.7 million.
Brisk stock trading was behind much of the gain. Ameritrade said it added more new customers during the quarter than it did in all of 1999, and that it processes 149,000 trades a day, up from 52,000 in the year-earlier quarter.
Yet some analysts see a slowdown in trading growth, especially if the U.S. economy cools. That sentiment has helped drive stocks of online brokers lower: Ameritrade fell to a 52-week low of 10 1/2 last month.
In early trading Tuesday, the stock was at 12 3/4.