E*Trade Becomes an ATM Player

Feb 4, 2003

Beth Cox

An E*Trade Bank subsidiary is acquiring a portfolio of 4,000 additional ATM machines, catapulting the company into the No. 2 position in the United States with a network of 15,000 machines. The parent company, Menlo Park, Calif.-based online banking and brokerage firm E*Trade Group, said that E*Trade Access Inc., a subsidiary of E*Trade Bank, made the acquisition from a San Diego-based company called XtraCash ATM Inc. The acquisition expands the network in California and other western states. E*Trade said that by developing a large-scale ATM network, it is "increasing its recurring revenue streams and expanding upon its multi-touchpoint strategy." Translated, that seems to mean a revenue stream not dependent on the stock market. Financial specifics of the deal were not disclosed. The ATM network complements E*Trade's online bank, which had $15.4 billion in assets as of Dec. 31. It also establishes the company a little more in the real world, where the company already operates several E*Trade Financial Centers. E*Trade Bank customers get unlimited no-fee access to their money at the branded ATMs. E*Trade was just in the news last month when the company's lavishly paid chairman and chief executive officer, Christos Cotsakos, resigned, and was succeeded by President and COO Mitchell Caplan. Cotsakos is credited with diversifying E*Trade from a pure online brokerage into the mortgage and banking businesses. E*Trade issued its quarterly earnings report that same week and while the company said its profits were $30 million for the period, it issued a warning about likely weakness in future financial results. Concord EFS Inc. in Memphis, Tenn., is the largest ATM operator.


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