UPDATE 2-TradeStation Q2 profit falls, but forecasts solid Q3
(Adds details, analyst's comments, share movement)
July 24 (Reuters) - TradeStation Group Inc's (TRAD.O) quarterly profit fell 25 percent, as higher revenue was offset by a drop in net interest income, but the online brokerage forecast a solid third quarter.
Net income for the second quarter was $6.1 million, or 14 cents a share, compared with $8.1 million, or 18 cents a share in the year ago period.
Net income included an expense of 2 cents a share for accelerated vesting of certain officer and director stock options, the company said.
Analysts expected the company to earn 16 cents a share, according to Reuters Estimates.
Earnings growth continues to be hurt as lower interest rates cut into the company's net interest income, analyst William Tanona of Goldman Sachs said.
The U.S. Federal Reserve has cut its benchmark interest rate four times since January this year to 2.00 percent from 4.25 percent.
Net revenue for the quarter rose 2 percent to $36.6 million, marginally beating analysts' estimates of $35.9 million. Brokerage commissions and fees, the biggest contributor to the net revenue, rose 20 percent to $28.2 million.
Net interest income fell 43 percent to $6.2 million.
"We anticipate that net interest income revenue will bottom this quarter as we forecast no additional rate cuts and we expect client balances to grow throughout 2009," Tanona said.
During the quarter, TradeStations' daily average revenue trades, or DARTs -- a key measure of trading activity for retail brokerage firms -- rose 28 percent to 91,121.
For the third quarter, TradeStation forecast earnings of 15 cents to 19 cents on revenue of $37 million to $42 million for the third quarter.
Analysts expect earnings of 17 cents a share on revenue of $37.7 million.
Shares of the company were trading down more than 3 percent at $11.06 in afternoon trade on Nasdaq. The stock has lost 20 percent of its value since January. (Reporting by Sweta Singh in Bangalore; Editing by Bernard Orr)
