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Little blog post for those interested:
http://globaleconomicanalysis.blogsp...ankruptcy.html
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What a bunch of [censored]. This blogger is working under the assumption that everything the CITI analyst said was correct.
Here's some (sanity?) from Bloomberg:
Nov. 13 (Bloomberg) --
E*Trade Financial Corp., the online brokerage whose shares plunged 59 percent yesterday, is ``highly unlikely'' to declare bankruptcy, BMO Capital Markets said.
E*Trade shares surged the most in six years, adding 61 cents, or 17 percent, to $4.16 as of 9:48 a.m. in New York. The stock has lost 84 percent this year through yesterday, compared with an 18 percent slide for the Standard & Poor's 500 Financials Index.
``Management has stated that the company could absorb $1 billion in writedowns and still maintain well-capitalized status,'' analyst Michael Vinciquerra wrote in a note. ``The company also indicated to us that it is spending a great deal of time looking for ways to cap or lay off its potential losses.''
``Withdrawals would have to be massive for the company to have major issues,'' Vinciquerra wrote. ``A key fact that some people seem to be ignoring is that E*Trade's deposits have actually grown for the last 13 months consecutively.''
The Atlanta-based analyst maintained the ``outperform'' rating he has had on the stock since starting coverage in April. His forecast that the New York-based brokerage will report a profit of 89 cents a share this year may be ``too optimistic based on recent commentary,'' Vinciquerra wrote. He expects profit of $1.46 a share next year.
E*Trade plunged yesterday after the third-largest online brokerage forecast a decline in fourth-quarter earnings and Citi Investment Research analyst Prashant Bhatia said the company may go bankrupt. There's a 15 percent chance the company will seek protection from creditors after management ``put the viability of the franchise at risk,'' Bhatia wrote in a note.
Vinciquerra said the company would probably be acquired before filing for bankruptcy.
``In the event that it proves necessary in a worse-case scenario, we also believe there are buyers that would find E*Trade's entire business highly attractive at a meaningful premium to current levels,'' he wrote.
BMO Capital Markets is a unit of Bank of Montreal, Canada's fourth-largest bank.