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DLJdirect

DLJdirect.com. Arvind Rangaswamy. Background. One of the most dynamic industries on the Internet with demonstrable value delivered (16% of all transactions are online now) Players Pure Plays - Clicks (Datek.com) Bricks going to Bricks+Clicks (Schwab, Fidelity, DLJDirect, Merrill Lynch)

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DLJdirect

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  1. DLJdirect.com Arvind Rangaswamy DLJdirect.com

  2. Background • One of the most dynamic industries on the Internet with demonstrable value delivered (16% of all transactions are online now) • Players • Pure Plays - Clicks (Datek.com) • Bricks going to Bricks+Clicks (Schwab, Fidelity, DLJDirect, Merrill Lynch) • Clicks going to Bricks+Clicks (E*trade) • More than 100 other players • Stock trading is well aligned with the capabilities of the Internet DLJdirect.com

  3. NPV of a Customer • Net revenue per customer per year (Exh 6) 38.38 (Rev/trade)17.6 (Trades/year) = $675 • Roughly 50% of the revenue is variable (Exh 16) • Fixed - Part of compensation, other than customer service personnel ( 60% of 41.4) = 24.8 (Note 288 out of 466 employees in customer support) • Fixed - Advertising = 37.5 • Fixed - Occupancy and equipment = 6.0 • Fixed - Technology and communications = 10.7 •  Profit per active account per year is 337.5 (50% of 675) • Roughly 90% of customers are retained every year DLJdirect.com

  4. NPV of Customer • 10% discount rate •  Lifetime discounted profit = • Acquisition cost  $500 • NPV of Customer is $1276 • This value would be higher if there were more trades per day. DLJdirect.com

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