E*Trade reports 1st-qtr net loss amid retooling

NEW YORK (Reuters) - E*Trade Financial Corp (ETFC.O: Quote, Profile, Research) reported a steeper-than-expected quarterly loss on Thursday on additional losses from home equity loans as its management sharpens the discount brokerage's strategic focus.

E*Trade reported a first-quarter net loss of $91.2 million, or 20 cents per share, in a sharp improvement from its $1.7 billion, or $3.98 per share, loss of the previous quarter, when the company teetered on the brink of bankruptcy.

E*Trade shares rose 11 percent in after-hours trade.

Analysts, on average, had expected a loss of 10 cents per share, according to Reuters Estimates. A year ago, E*Trade had net income of $169.4 million, or 39 cents per share.

Chief Executive Donald Layton said in an interview the three-year cumulative losses on the company's mortgage portfolio were still expected to range from $1 billion to $1.5 billion, despite a difficult housing market, "It's not getting worse, which is quite an accomplishment," he said.

Customer assets declined 11 percent from the previous quarter, while the number of daily trades fell by 11 percent.

Total new customer accounts rose by 62,000 to 4.8 million.

The company has been rumored to be a takeover target by rivals TD Ameritrade Holding Corp (AMTD.O: Quote, Profile, Research) and Charles Schwab Corp (SCHW.O: Quote, Profile, Research). When asked whether E*Trade would consider letting itself be acquired, Layton only said," We'll do what's in the long-term interest of our investors."

In an effort to cut costs, Layton said the company planned to reduce compensation expenses by 10 percent, the bulk of which will happen by the end of this quarter. That did not mean cutting personnel by 10 percent, he added.