- Online brokerage Ameritrade Holding said last week that it will lay off more than 300 of its 2500 employees, while Morgan OnLine confirmed it will lay off about 150 of its approximately 400 employees.
The announcements came in the wake of a spending freeze at San Francisco-based Charles Schwab last month and a general decline in the stock market. Analysts say the brokerage industry has been due for consolidation, particularly in online trading.
"People have been more hesitant about what they want to buy or what they want to sell," says Larry Tabb, an analyst at TowerGroup in Needham, Massachusetts. He predicts there will be even more consolidation. "It’s a cleansing mechanism," he says.
But Mary Sedarat, a spokeswoman for New York-based JP Morgan & Co’s Morgan OnLine unit, says the layoffs at Morgan aren’t due to the state of the market but to the recent merger with Chase Manhattan. Previously, she says, the Morgan OnLine product was a separate service sold to high-net-worth customers. Now, the online product will be offered as a part of the whole package, and the sales staff is superfluous, she says.
"The layoffs came from the sales and marketing side," Sedarat says. "The people who build it, design it and dream it are still in place." Some of the people to be let go will be offered other jobs within the company, she adds.
Downturn Hurts Ameritrade
Meanwhile, Omaha-based Ameritrade, which has been without a CEO since August, announced new numbers that show that it’s feeling the impact of the market’s downturn. The company estimated that its loss per share for the first quarter of this year will be between 12 and 14 cents.
However, the brokerage also said in a statement that it continues to gain customers. Last month, 52,000 new accounts were opened, compared with 40,000 in November, the company says. Volume was at an average of 115,000 trades per day, compared with 105,000 trades per day a year earlier. This is a drop, however, from a peak of 173,000 trades per day last March.