TD Ameritrade acquisition's 4Q profit down 46%

Thinkorswim Group Inc., an online brokerage and investor education service provider which is being acquired by TD Ameritrade, said Wednesday its fourth-quarter profit fell 46 percent due to a decline in interest and education revenue and special charges. Net income fell to $9.5 million, or 14 cents per share, from $17.8 million, or 26 cents per share, during the same quarter a year earlier. Thinkorswim's adjusted earnings, which exclude $3.7 million for costs tied to customer write-offs and trade errors and $1 million tied to the company's proposed acquisition by TD Ameritrade, totaled $13.2 million, or 20 cents per share. Online retail brokerage TD Ameritrade is in the process of acquiring thinkorswim for $606 million in cash and stock. The deal is expected to close by the middle of the year. Analysts polled by Thomson Reuters, on average, forecast earnings of 23 cents per share for the quarter on revenue of $92.57 million. Analysts do not typically include special charges or gains in their estimates. Thinkorswim's revenue fell to $85.8 million during the fourth quarter, from $94.1 million during the final quarter in 2007. Revenue declined due to drops in both interest and education revenue. Thinkorswim's interest revenue fell 54 percent to $3.7 million during the quarter, from $8 million during the period a year earlier. Education revenue fell 30 percent to $36.9 million from $52.6 million. Thinkorswim had 97,600 active subscribers for its education group at the end of the fourth quarter, compared with 102,800 at the same time a year earlier. Those declines help more than offset gains in commissions. Revenue from commissions increased 39 percent to $35.2 million, from $25.3 million during the last quarter in 2007. Commissions improved as the number of new accounts opened increased 44 percent to 32,700. A total of 12,175 new accounts were funded during the quarter, a 10 percent increase. With the additional customers, trading volume also picked up. Average retail trades per day increased 47 percent to 61,400. For the full year, thinkorswim earned $59.4 million, or 87 cents per share, compared with $22.4 million, or 34 cents per share, in 2007. Shares of thinkorswim rose 2 cents to $7.68 in morning trading.