| 20 October 2009

"Our customers and our business model continued to display their resilience in the third quarter despite the difficult economic environment." And so starts the refrain from optionsXpress Holdings (OXPS) CEO David Fisher on a tough Q3. Net income dropped 39% year-over-year to $16.3 million. Analysts were expecting a drop, estimating $0.26 per share, and yet they came in just above estimates at $0.28 a share.

According to the release, revenues decreased 7% and daily average trades decreased 12% year-over-year. Customers continued to focus their energy on derivatives, according to Fisher, boosting options trading activity as compared with equity trading activity. The firm established itself as a safe haven for active investors looking expand their trading repitoire, especially with options, as the company name suggests. 

Recent developments at the firm, including IDEAS and their Adob Air desktop trading application, OX|Xtend 2, have encouraged the derivatives trading trend and in a sense have helped the firm stay true to its roots. Fisher hopes to capitalize on this development by aggressively pursuing aquisitions, including a possible expansion into international markets, according to an interview with Reuters.

The last new product launch or site enhancement we've seen from the company came back in July with the launch of IDEAS.

Earnings were flat quarter-over-quarter, which is exactly what we saw with Charles Schwab (SCHW) last week. New accounts increased by 6,000 to 343,900 total accounts (an all-time high). This compares with 9,000 new accounts added last quarter.

Any discussion of possible acquisitions would be incomplete without some discussion of E*TRADE Financial (ETFC). The troubled bank and brokerage is rumored to be the target of a possible takeover and topping the list are Schwab and TD Ameritrade (AMTD). Both E*TRADE and TD Ameritrade are scheduled to release their third-quarter earnings October 27th.