E-Trade To Move Headquarters To New York

SAN FRANCISCO (AP) -- E-Trade Financial Corp. is moving its headquarters from Silicon Valley to New York next year in the company's latest step to distance itself from its roots as a dot-com rebel.

The Jan. 1 address change, announced Wednesday, is largely symbolic.

The company, best known for its Internet stock brokerage, expects only three or four of the 360 employees at its Menlo Park headquarters to transfer to New York; the remainder of the Menlo Park workers are expected to remain in the same office, which will remain the company's technology hub, E-Trade spokeswoman Connie Dotson said.

But some of those technology jobs eventually may be exported overseas. E-Trade acknowledged Wednesday it soon may join the herd of other U.S. employers trying to boost profits by sending some technology work to the less expensive labor pool available in other countries.

A decision on whether that move makes sense, and how many jobs might be affected, is likely to be reached during the first half of 2004, Dotson said. Roughly 90 percent of E-Trade's 4,000 employees are based in the United States.

The move to New York largely reflects E-Trade's desire to be taken more seriously as a diversified financial services company.

Besides its stock brokerage, E-Trade owns a growing online bank with $11.3 billion in customer deposits and has been trying to become a bigger player in the mortgage and mutual fund industries.

"We have become a leader in the financial services industry, so we thought we needed be headquartered in New York," Dotson said.

E-Trade has made its home in Silicon Valley since entrepreneur Bill Porter launched the company, originally called Trade Plus, in 1982.

But most of E-Trade's top managers have been working on the East Coast since Christos Cotsakos, its leader during the company's dot-com heyday, stepped down as CEO in January to appease investors incensed about his $80 million compensation package last year.

Mitchell Caplan, E-Trade's current CEO, and Arlen Gelbard, who runs E-Trade's bank, both work in Arlington, Va., where they will remain even after the headquarters move. Jarrett Lilien, E-Trade's chief operation officer, has been in New York for months.

E-Trade's current management team has assumed a lower profile and a more buttoned-down approach than the colorful Cotsakos, who delighted in thumbing his nose at the financial-services establishment. Cotsakos trumpeted E-Trade's irreverent attitude in often-zany TV commercials that helped build one of the Internet's best-known brands.

The change in style has paid off for E-Trade so far, with the company's stock soaring 155 percent since Cotsakos' departure. E-Trade had earned $95.6 million through the first nine months of this year, reversing a loss of $216.8 million at the same time last year.

E-Trade told analysts Wednesday that its 2004 earnings will range from 70 cents to 85 cents per share, up from a projected 50 cents to 54 cents per share this year.