E*Trade Loss Deeper Than Expected

E*Trade reported a bigger-than-expected second-quarter loss on Tuesday, and warned that it could see more losses as credit-related troubles continued to weigh.

E Trade
E Trade

The U.S. online brokerage posted a net loss of $94.6 million, or 19 cents a share, in the period ended June 30, compared with a profit of $159.1 million, or 37 cents per share a year earlier.

Revenue was down 20 percent at $532.3 million, including a provision of $319.1 million for loan losses, which have hurt the company more than its competitors over the last year.

On average, analysts polled by Reuters Estimates expected a second-quarter loss of 14 cents a share on revenue of $319.3 million.

E*Trade said it liquidated about 65 percent of the $330 million in preferred equity held in mortgage lenders Fannie Mae and Freddie Mac, which will result in an $83 million pretax loss in the third quarter.

It also warned that "the current economic environment may impede our expectations to return to profitability from continuing operations this year."

The loss from continuing operations was $119.4 million in the quarter, compared to a profit of $159.1 million in the same quarter of 2007.

E*Trade's total loan delinquencies grew 9 percent from 2007, while its home equity loan delinquencies grew 4 percent.

The company reported daily average revenue trades, or DARTS, of 172,314 in the period, up 2 percent from the year-ago figure.