E-Trade halved on warning, sell rating
Online broker backs off outlook, citing securities portfolio

By Greg Morcroft, MarketWatch



Shares of E-Trade Financial Corp. lost more than half their value Monday, plunging as the company faces more subprime-related write-downs and as analysts at Citigroup suggest a possible bankruptcy for the online broker.
Moreover, Fitch Ratings downgraded the firm's collateralized CDO asset manager rating to CAM4 from CAM2- in light of concerns about E-Trade's ability to manage exposure to some debt securities.
The rating agency said E Trade's performance on CDOs, short for collateralized debt obligations, remains below the average of its peers.
Companies with CAM4 ratings, Fitch explained Monday, "will generally necessitate heightened ... surveillance owing to the presence of situations or conditions in need of improvement or as a result of significant recent changes in operating practices, ownership, management, operational infrastructure, and/or business strategy that give rise to concerns regarding the match between the organization's current competencies and wherewithal and the planned execution of CDO investment objectives."

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