U.S. Bancorp Piper Jaffray Delivers Analysis of Online Trading Results for First Quarter 2000

Business Wire, May 5, 2000

Business Editors

NOTE TO EDITORS: The following is an investment opinion issued

by U.S. Bancorp Piper Jaffray

SAN FRANCISCO--(BUSINESS WIRE)--May 5, 2000

Online Brokers Sustain Record Growth; Online Daily Trades Up

a Record 69 Percent Sequentially; Industry Continues to Fire

on All Cylinders as it Adds 2.5 Million New Accounts

U.S. Bancorp Piper Jaffray Managing Director and Senior eFinance Analyst Stephen Franco provided analysis of the online brokerage sector, with results of a proprietary research study.

"The online brokerage industry continued its staggering rise in the first quarter of 2000, as we saw online trading volumes rise 69 percent sequentially," said Franco. "Online brokers added over 2.5 million new accounts, easily surpassing the industry record for new accounts set the previous quarter. In addition, the amount of assets held in online brokerage accounts grew by 23.5 percent from the previous quarter to over $1 trillion."

Key highlights of Franco's analysis include:

-- Schwab retains its No.1 position, but despite a strong quarter

its trading volume market share continues to diminish in the

face of increased low-cost competition. Schwab should

recapture some market share with the inclusion of recently

acquired Cybercorp's trading volumes in the second quarter

2000;

-- For the 4th consecutive quarter E-Trade outpaced the industry

as it added an astounding 562,000 net new investment accounts,

a 30 percent sequential gain;

-- Schwab's acquisition of Cybercorp and the remarkable success

of newcomer Tradescape have forced the online brokerage

industry to recognize the day trader as an important and

profitable niche;

-- Despite the increased competition for new accounts and the

staggering sums spent to attract them, acquisition costs

declined in the first quarter of 2000;

-- Bulge-bracket firms do not appear to have had a significant

impact on the online front. Hindered by channel conflict and

old economy infrastructure, in our opinion, firms such as

Merrill Lynch, Morgan Stanley Dean Witter and American Express

(a) refuse to release their online brokerage results;

-- Buoyed by investor confidence and the strong performance of

the NASDAQ, we estimate margin balances rose 35 percent to 40

percent in first quarter 2000. We further estimate that margin

balances have since fallen 20 percent to 25 percent since the

end of the quarter.

Rank Firm             Trades/  Market   Q/Q %   Accounts     Assets
                       Day(i)   Share   Change  (Thousands) (Millions)

1    Schwab           293,318   21.4%   65.3%   3,700       417,700
2    E-Trade(a)       214,573   15.7%   74.1%   2,443        62,000
3    Waterhouse       182,336   13.3%   69.9%   1,728       118,000
4    Fidelity         156,583   11.4%   69.5%   4,220       328,300
5    Ameritrade(a)    129,709    9.5%   82.0%     992        38,900
6    Datek            121,261    8.8%   49.6%     457        15,100
7    DLJ Direct        44,100    3.2%   59.0%     389        27,000
8    Scottrade         34,494    2.5%   56.4%     235         6,060
9    Cybercorp         25,944    1.9%   82.5%       4           352
10   Suretrade         23,000    1.7%   74.2%     191         3,000
11   Tradescape        20,501    1.5%    NA         2           257
12   Dreyfus           14,292    1.0%   41.2%      49         8,400
13   NDB (a,c)          12,963    0.9%   36.5%     216        12,600
14   Quick & Reilly     9,300    0.7%  181.8%     147         6,150
15   A. B. Watley        7135    0.5%   50.1%       8           435
     Other(ii)         81,491    5.9%  138.9%   1,169        67,006
     Total          1,371,000  100.0%   69.0%  15,950     1,111,259

(i)The data represents all online trades in North America, excluding IVR and broker assisted trades. Historical numbers have been adjusted, as new data becomes available.

(ii)The other category's disproportionate increase is due to MSDW's refusal to participate in the survey. Estimates for MSDW are now reflected in Other, which grew 60% sequentially once MSDW estimates are removed.

Sources: U.S. Bancorp Piper Jaffray, Company and Industry Sources For more information, visit our Web site at www.piperjaffray.com.

U.S. Bancorp Piper Jaffray, a subsidiary of Minneapolis-based U.S. Bancorp, provides a full range of investment products and services to businesses, institutions and individuals. The company's investment banking business has grown exponentially in the last several years by focusing on the needs of growth companies in the health care, technology, financial institutions, consumer and industrial growth sectors. U.S. Bancorp Piper Jaffray has a national reputation for its expertise in fundamental research and equity and debt financing. U.S. Bancorp offers a comprehensive range of financial solutions through U.S. Bank, First American Asset Management, U.S. Bancorp Libra Investments and U.S. Bancorp Piper Jaffray. Securities products and services offered through U.S. Bancorp Piper Jaffray, Inc., member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp.