* Q4 EPS 26 cents on $657.9 mln in revenue
* First full quarter with thinkorswim
* Shares slip 1.4 percent on conservative forecast (Adds analyst, commissions, Schwab; updates shares)
By Jonathan Spicer
NEW YORK, Oct 27 (Reuters) - TD Ameritrade Holding Corp (AMTD.O) reported a quarterly earnings decline less steep than analysts expected, and the brokerage said it would consider an acquisition, share buyback or a dividend.
Shares of the second-biggest U.S. online broker slipped more than 1 percent on Tuesday as it conservatively forecast fiscal 2010 earnings of $1.10 to $1.40, compared with the analysts' average estimate of $1.29. The company also said the economy was more likely to see higher than lower interest rates, which could further boost earnings.
TD Ameritrade, which has now fully absorbed the purchase of options-focused brokerage thinkorswim Inc, said it would take advantage of the $1.14 billion in cash it holds to propel growth into next year.
"We are reviewing our capital plan in order to better position the company to take advantage of opportunities to add value regardless of the environment," Chief Executive Officer Fred Tomczyk told analysts and media on a conference call.
"We will continue to study our options," he added, "whether they be another acquisition, a share buyback or a dividend."
Earnings fell to $156.7 million, or 26 cents per share, in the fourth quarter ended on Sept. 30 from $172.0 million, or 30 cents a share, a year earlier.
Analysts on average expected the Omaha, Nebraska-based company to earn 22 cents per share, according to Thomson Reuters I/B/E/S.
Revenue edged slightly higher to $657.9 million, while analysts had forecast $630.5 million.
TD Ameritrade agreed to a settlement in July with New York's attorney general to buy back auction rate securities, or ARS, following a probe into illegal marketing and sales of the long-term debt securities.
The company logged 2 cents per share on losses on ARS in the quarter, less than most analysts' estimates.
TD Ameritrade said daily average revenue trades, or DARTS, were a record 411,000 in the quarter as thinkorswim added to a robust summer. Tomczyk said individual investors were resilient, "taking advantage of volatility and the significant intraday market movements that seemed to happen regularly."
The company predicted DARTS would jump to between 398,000 and 476,000 in fiscal 2010 from 372,000 in fiscal 2009. Trading so far this month was 406,000, said the company, which runs the largest U.S. discount trading platform.
TD Ameritrade closed its $606 million purchase of thinkorswim in June, and costs from the deal dragged earnings down from a year earlier. Still, management has repeated over the last few months that it would not hesitate to pounce on a good takeover opportunity.
Revenue from commissions was higher than analysts, factoring in the thinkorswim acquisition, had expected. Meanwhile, low interest rates forced the company to waive some $20 million in money market fees.
"The company benefited from much stronger pricing than we expected, which we are not sure is sustainable at this point," Raymond James analyst Patrick O'Shaughnessy said in a note.
TD Ameritrade forecast $2.54 billion to $2.99 billion in net revenue next year, compared with the analysts' average estimate of $2.68 billion. The company logged $2.4 billion in 2009 revenue.
"The outlook is reasonably conservative," said Sandler O'Neill analyst Richard Repetto. "The biggest thing is that you just don't know where trading volume is going to go, nor interest rates."
TD Ameritrade shares were off 1.4 percent at $19.20 in morning trading, behind industry peers.
Rival Charles Schwab Corp SCHW.O, which has a far larger stable of assets, said earlier this month quarterly profit fell 34 percent as fee waivers and lower trading pinched its results. Troubled smaller peer E*Trade Financial Corp (ETFC.O), which reports later on Tuesday, is seen by some as a takeover target. [ID:nN15295095]
Meanwhile, Toronto-Dominion Bank (TD.TO), TD Ameritrade's largest shareholder, said separately that it expected the U.S.-based brokerage to add C$59 million ($55 million) to its fourth-quarter net income. (Reporting by Jonathan Spicer; Editing by Lisa Von Ahn and Maureen Bavdek)