Ameritrade, J.P. Morgan to cut workers
ONLINE BROKERAGE AMERITRADE Holding said Monday that it will lay off more than 300 employees, and Morgan OnLine confirmed that it will lay off about 150 employees.
The announcements come in the wake of a spending freeze at Charles Schwab last month and a general decline in the stock market.
Analysts said the brokerage industry has been due for consolidation, particularly in the online trading area.
"It seems that the industry is starting to contract," said Larry Tabb, an analyst at TowerGroup in Needham, Mass. "People have been more hesitant about what they want to buy or what they want to sell."
Tabb also predicted that there will be even more consolidation, with larger firms buying up the smaller, less-profitable outlets.
"It's a cleansing mechanism," he said.
But Mary Sedarat, a spokeswoman for New York-based J.P. Morgan & Co.'s Morgan OnLine unit, said the layoffs at Morgan aren't due to the state of the market but to the recent merger with Chase Manhattan.
Previously, she said, the Morgan OnLine product was a separate service sold to Morgan's high net worth customers in addition to their other banking services. Now the online product will be offered as a part of the whole package, and the sales staff is superfluous, she said.
"The layoffs came from the sales and marketing side," Sedarat said. "The people who build it, design it, and dream it are still in place."
Some of the approximately 150 people let go will be offered other jobs within the company, she added.
Meanwhile, Omaha-based Ameritrade, which has been without a CEO since August, announced new numbers Monday that show that it is suffering from the market's downturn.
The company estimated that its loss per share for the first quarter of 2001 will be between 12 cents and 14 cents. However, the company also said in a statement Monday that the brokerage continues to gain customers. In December, 52,000 new accounts were opened, compared to 40,000 in November, the company said. Volume was at an average of 115,000 trades per day, compared to 105,000 trades per day the previous year. This is a drop, however, from a peak of 173,000 trades per day last March .
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