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E*Trade (Nasdaq: ETFC ) finally has its new interim CEO, but he's only going to fuel rumors of a buyout in 2010. The discount broker announced that Robert Druskin will take over for Don Layton.
Ever since Layton announced that he would retire by year's end, it's been fun to speculate about the direction that the company would take with its next helmsman. Would it land a flashy outsider? Would it raid the executive ranks of rivals Charles Schwab (Nasdaq: SCHW ) or TD AMERITRADE (Nasdaq: AMTD ) ?
As the clock ticked down on 2009, other questions arose:
- Would Layton have to stay on beyond his exit date?
- Was E*Trade having a problem attracting a successor, or was it just picky?
- Would it have to settle for a lesser CEO to avoid the embarrassment of missing Layton's retirement deadline?
Druskin isn't chopped liver. He's a former Citigroup (NYSE: C ) COO. However, he's also an insider. Druskin has been an E*Trade board member for nearly two years. The fact that he's just the interim CEO -- for now, anyway -- is only going to heighten the buyout buzz.
Let's go over the three reasons the rumors are credible.
First of all, settling for an insider -- Druskin's pedigree papers aside -- is a sign that E*Trade isn't trying to seek out an outsider (because it sees an inevitable sale) or that potential candidates are being scared off (because they see an inevitable sale).
The second reason is that E*Trade made sure the announcement was delivered before Layton's retirement. The broker's credibility -- if not its share price -- would have taken a hit if leadership were in limbo.
The third and final reason is the "interim" tag. Temporary CEOs often become permanent ones, but E*Trade is essentially admitting that it's still looking, and that's one way to pinpoint a potential suitor.
E*Trade is a better company than its share price suggests. The industry is in a near-term funk, but E*Trade is still running a successful discount brokerage, despite the online banking demons.
Someone is going to step up and make E*Trade an offer it can't refuse next year -- and its interim CEO will nod along.
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