etrade had to borrow money from a hedge fund to keep the doors open. the waves they sent out are now lapping at their shores.
NEW YORK (AP) - E-Trade Financial Corp. shares fell to an all-time low on Tuesday amid further concerns the troubled online brokerage needs additional capital to stay in business.
The broker has been under pressure since it disclosed massive losses in its mortgage business last year. It is now in the midst of a turnaround plan after receiving a $2.55 billion cash infusion from Chicago hedge fund Citadel Investment Group.
However, Egan-Jones Rating Co. on Monday lowered its rating to "CCC" from "CC." The rating agency went on to say that E-Trade "is in desperate need of more support which, if it does not receive shortly, might render it unsalvageable."
Investors sent shares down 47 cents, or 17 percent, to $2.35 in afternoon trading. The stock, which last year traded as high as $26.08, fell as low as $2.08 earlier in the session.
Wall Street might get a better picture of how E-Trade is managing its turnaround when it reports fourth-quarter results on Jan. 24. Analysts polled by Thomson Financial project a loss of $2.90 per share - and a $2.28 loss for the year.
Jarrett Lilien, the broker's acting chief executive, last month said a customer "win-back" plan was beginning to pay off. Many customers pulled cash from E-Trade accounts on speculation the online brokerage might be forced into bankruptcy.
Both analysts and investors have been concerned E-Trade might not be able to keep customer levels high enough to maintain its revenue stream.
In the meantime, rivals Charles Schwab Corp. and TD Ameritrade Holdings Corp. have reported a surge in the number of average daily trades - considered by analysts to be a direct benefit of problems at E-Trade. In November, E-Trade said it would no longer issue monthly reports on trading activity.
Former E-Trade CEO Mitchell Caplan resigned from the online brokerage as of Dec. 31. The company disclosed in a regulatory filing that he would receive a $10.9 million severance package.
Schwab shares fell $1.19, or 4.9 percent, to $23.25; and Ameritrade dropped 66 cents, or 3.3 percent, to $19.31.
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