E*TRADE (NASDAQ: ETFC) has announced an ‘aggressive customer win-back campaign’ as one component of its ‘comprehensive’ turnaround plan.   Since this is a preview, that comprehensive plan is more of a promise for a comprehensive turnaround plan. 

The company said the turnaround plan has been developed in conjunction with a thorough evaluation of E*TRADE’s core business strategy with an assessment of its organizational structure, operating expense base reviews, and balance sheet transition.

The customer win-back campaign supposedly began earlier this month and incorporates targeted engagement incentives and outreach initiatives to current and prospective customers alike.  The company said it will detail its formal turnaround plans after its Q4 and fiscal results are released on January 24, 2008.  So there is another month before the  investment community can really see how the company will do down the road.

Obviously there have been many client defections.  We just haven’t gotten a hard number on it.  You know Joe Moglia at TD Ameritrade (NASDAQ:AMTD) and Charles Schwab of Charles Schwab (NASDAQ: SCHW) are ready and eager to take any unhappy or nervous E*Trade accounts after the malaise there. 

We still think that one of these larger firms may decide to pounce on E*Trade and acquire it while it is down and out.  But it really really boils down to how many clients they can steal away for next to nothing.  If you can spend $25 million on an aggressive ad campaign and to staff more account openers to get 5 million accounts, it might make more business sense to do that rather than a couple to few billion dollars where you may be assuming many more liabilities.

Jon C. Ogg
December 21, 2007

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