Filed under: Bad news, Competitive strategy
A good rule of the thumb for investors is not to own shares in desperate companies. Desperate companies do desperate things, and acts of desperation are often detrimental to the creation of shareholder value.
Less than a week after selling $3 billion worth of asset-backed securities for about 30 cents on the dollar, E*Trade (NASDAQ: ETFC) is hiking the yields on its savings account and short-term CDs. According to The Wall Street Journal, “For savers, E*Trade’s move presents an opportunity to take advantage of rates that are among the highest available on short-term deposit accounts and are several percentage points above national averages.”
And now, ladies and gentleman, the greatest PR spin of the month, courtesy of Jarrett Lilien, E*Trade’s acting chief executive. She told the Journal that “it was a great opportunity to give a thank you to our loyal customers in the face of a difficult time like the last couple of weeks”.
Right — but what about the shareholders who will see the higher rates paid right out of what’s left of E*Trade’s equity?
Continue reading E*Trade raises its rates for customers — desperation?
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