How Many of Those New E*Trade Accounts Are Real Accounts?
By Herb Greenberg
Originally posted at 10:00 AM ET 2/9/01 on RealMoney.com
An account by any other name: When E*Trade (EGRP:Nasdaq - news) announced earnings a few weeks ago, it touted (right there in its headline) that it added 244,000 new accounts. Those new accounts included a 26% gain in banking customers and a 6% improvement at the brokerage. Not bad numbers, especially at the bank. But is that a real number? The only reason I ask is because a reader wrote, saying, "I notice E*Trade touting the new bank accounts that they added last quarter. I am an E*Trade account holder that had a bank account opened without my authorization. I was mailed a credit card from E*Trade Bank that I did not apply for. There could be some 'voodoo' numbers in those 'new' accounts being touted."
Indeed, there could be. Turns out E*Trade did indeed open accounts for certain "key" customers, and, as an incentive to fund the account, gave them $25. Customers were asked to tell the company if they wanted to fund or close the account, though they weren't required to respond. A spokeswoman says the new accounts, while having an impact, didn't have a big impact. So, how small was it? The spokeswoman told my assistant, Brian Harris, that she'd try to get a number, but never did.
Like materiality, the importance of "impact" is in the eye of the beholder. |
