UPDATE 3-TD Ameritrade 2nd quarter profit up 35 pct on net new assets

Wed Apr 23, 2014 11:34am EDT
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(Adds CEO comments on stock price and outlook)

By Jed Horowitz

NEW YORK, April 23 (Reuters) - TD Ameritrade Holding Corp , the biggest U.S. discount broker, said profit in its fiscal second quarter jumped 34.7 percent to $194 million on record revenue driven by net new client assets of $12.2 billion and heavy trading.

The profit translates to 35 cents a share, also up 35 percent from the year-earlier quarter and consistent with the forecast of analysts tracked by Thomson Reuters I/B/E/S.

On a conference call with analysts, Chief Financial Officer William Gerber said the firm expects earnings per share for the firm's fiscal year, which ends on Sept. 30, to hit or beat the high end of its earlier projections of $1.20 to $1.40. In the first six months, TD Ameritrade has generated earnings of 70 cents a share, up from 53 cents in the comparable 2013 period.

Fred Tomczyk, the company's chief executive, told Reuters that it's unrealistic to expect customer trading to continue at the elevated levels of the just-ended quarter, however, in part because the social media, biotech and other technology stocks popular with TD Ameritrade's customers are declining.

On the conference call, Tomczyk criticized the knee-jerk reaction to Michael Lewis's new book "Flash Boys," which says markets are rigged in favor of super-automated, high-frequency trading firms.

TD Ameritrade and other discount brokerage firms sell most of their customer trades to selected market-makers for execution, leading to concerns from investors that Lewis's book may spur regulators to curtail their lucrative "payment for order flow" practice.

TD Ameritrade and other discounters' stocks fell by more than 10 percent after Lewis's book was published on April 7, though they have recovered much of the decline.   Continued...