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Ameritrade to Stay the Course

February 12, 2002

OMAHA, Neb. (AP) _ Discount online brokerage company Ameritrade will not venture into other financial services as a way to guard against market fluctuations, executives told shareholders Tuesday.

When the market turned sour last year and Ameritrade laid off hundreds of workers, some analysts questioned the company’s decision to stick with stock trading and not branch into businesses like banking or insurance, chief executive officer Joe Moglia said.

But low costs per trade and a national brand name helped the company make money in the first quarter that ended in December, despite a drop in revenue, Moglia said.

``In difficult markets we will hold our own,″ Moglia said. ``In good markets we will do best in the industry.″

Ameritrade had net income in the latest quarter of $9 million, or 4 cents per share, compared with a loss of $23 million, or 13 cents per share, in the same period last year.

Branching into other areas would increase Ameritrade’s costs and the complexity of its business, Moglia told about 200 shareholders at the company’s annual meeting.

One option for Ameritrade may be establishing partnerships with banks or other financial companies, pairing its brokerage expertise with another firm’s specialty, Moglia said.

Ameritrade has struggled along with other brokerage firms as the Internet technology bubble burst and stock trading dropped. Tuesday, Ameritrade shares were down 8 cents to close at $5.82 in trading on the Nasdaq Stock Market.

Founded 27 years ago by Joe Ricketts of Omaha, Ameritrade exploded in growth in 1997 when it began offering rates as low as $8 a trade amid the market’s heyday. Ameritrade now is among the top 10 online brokers in number of trades.

The company also spent money on quirky television commercials, a tradition it is continuing with a series of commercials that debuted last week, featuring a lifelike bull and bear whose personalities are shaped by their market perspectives: optimism from the bull, a reserved approach from the bear.


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