New York-based TD Waterhouse, which is 89 percent-owned by Canada's Toronto-Dominion Bank, began running ads this week in newspapers and on city buses carrying the stock ticker-like slogan "Xprs yourself." Next week, TV ads will air. It's a departure for the once-quiet firm.
"Our biggest shortfall was brand recognition," said Stephen McDonald, who's also vice chairman of the parent bank. "This is a big brand launch."
TD Waterhouse also plans to make acquisitions and may begin offering after-hours trading and shares in initial public offerings to its customers as it tries to gain on industry leader Charles Schwab, McDonald says.
Internet brokers will spend $1.2 billion on ads in the next year, according to Lehman Brothers Holdings. The industry is attempting to replicate the growth of the past year, when accounts almost doubled to 9.8 million from 5.1 million, according to U.S. Bancorp Piper Jaffray.
TD Waterhouse is stepping into a crowd of new ads, with both No. 2 Fidelity Investments and No. 6 Ameritrade Holding beginning campaigns in the past two weeks. Its $100 million will rank TD Waterhouse fifth in an industry where E*Trade Group may spend more than three times that amount.
"It's hard not to think about getting lost in the noise, but I'd rather be out there in the flow than not," said McDonald.
TD Waterhouse should add 775,000 accounts, giving it 2.8 million, in the 12 months through Oct. 31, 2000, said Greg Smith, an analyst with Hambrecht & Quist.
"I think they have a great opportunity," said Smith, who recommends investors to buy the stock.
TD Waterhouse expects to make an announcement on plans to offer IPOs by year-end, said McDonald, declining further comment.
On June 23, TD Waterhouse sold 42 million shares at $24 apiece in an initial public offering. The stock has since fallen to about $13 during a period when the Bloomberg U.S. Internet Financial Services Index has dropped 37 percent on concern that Internet trading volume fell in the quarter ending today.
"The whole concern about this last quarter is extremely short-term," McDonald said. "In April, the IPO would have been 36, not 24, so we didn't issue at the peak. We've got a lot of work to do to get the stock price back up, but we like our fundamentals.''
The firm kept $740 million of IPO proceeds, in part as a "war chest" for acquisitions, McDonald said. Last month, the firm acquired U.K.-based Yorkshire Building Society's 120,000-account YorkShare brokerage for $15.7 million.
"Expect to see further activity in that vein," McDonald said.
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