E*TRADE New CEO… Chances of Buyout Changing? (ETFC, C, AMTD, SCHW, GS, MS)

E*TRADE Financial Corporation (NASDAQ: ETFC) has some good news this morning, although this could actually be bad news for those hoping for an immediate takeover.  The company has been without an heir apparent in the CEO role until this morning.  The online brokerage firm has named board member Robert Druskin as Chairman and as Interim CEO effective as of December 31, 2009.  Druskin is well-known in the financial sector and is in his early 60’s, and this has both good and bad implications for the stock depending on how you look at E*TRADE as a prospective investment.

Druskin has served on E*TRADE’s board of directors since February 2008.  He will assume both roles from Don Layton, who announced earlier this year that he would be ‘retiring’ at the end of his contract.  Druskin has chaired the Finance and Risk Oversight Committee and served on the Nominating and Governance Committee during his tenure as a board member.

What may be more important to the fulfillment of this role is that Druskin is a former Chief Operating Officer of Citigroup Inc. (NYSE: C), and he was also a member of the chairman’s office.  That is the good part of the news.  He is capable of leading a company the size of E*TRADE.

But there may be some bad news here, even if the CEO role is still “interim” in the announcement.  E*TRADE has been a rumor-mill stock for much of 2009 with TD AMERITRADE (NASDAQ: AMTD) and Charles Schwab Corporation (NASDAQ: SCHW) both being thought of as potential acquirers of the company.  At one point last year, we even surmised that Morgan Stanley (NYSE: MS) or Goldman Sachs Group (NYSE: GS) could be potential acquirers.  That no longer seems in the cards, particularly as the bank holding company structure was a temporary smoke-and-mirrors move so they could qualify for government help during the financial meltdown.

The internal fulfillment of the role as interim-CEO may not kill the belief that a sale could come in 2010.  But the more the company signs contracts and the more and more entrenched it gets with stronger leaders, the chance that the company’s new leaders would want to sell may become less and less.

This is an argument that can swing both ways.  That is certain.  But so far the market is taking the ‘acquisition becomes less likely’ path.  Shares are down 4.8% at $1.70 after the first hour of trading this morning.

JON C. OGG