By Jay Loomis
Gannett News Service

NEW YORK - Buying stocks over the Internet was a novel idea for many investors when Connie Dotson joined ETrade Financial Corp. eight years ago. As the online broker prepared then to start its Web site, many of the 100 employees saw themselves as pioneers staking out new ground.

"The growth during the first two or three years was phenomenal," said Dotson, chief communications officer. "It blew away all projections."

These days ETrade is enjoying its latest renaissance of explosive growth.

After overcoming the three-year bear market that hurt the brokerage industry and tech companies, ETrade rebounded with the markets to enjoy its best year ever in 2003.

Profits more than tripled levels from a year earlier during the fourth quarter as trades by the company's 2.8 million brokerage customers climbed 46 percent. Margin loans to customers for purchasing stocks jumped 81 percent to $1.8 billion last year.

ETrade's stock has risen 215 percent during the past year to about $13 a share.

Despite that rise, some analysts see more gains ahead based on a bullish outlook for Internet brokers. Online trading is expected to surge as an alternative to full-service brokers that charge higher commissions and face a backlash from investors about alleged conflicts of interest involving analyst research.

"The scandals have brought some investors to the realization that they need to take charge and do it themselves," said Matt Snowling, an analyst at Friedman, Billings, Ramsey in Arlington, Va. "Online brokers are in a strong position to benefit from that do-it-yourself trend because of their lower costs."

ETrade's recent decision to move its headquarters from Menlo Park, Calif., to Manhattan, a few miles from Wall Street's hustle and bustle, illustrated how online brokers are becoming a bigger part of the financial mainstream.

"The move had a lot of symbolism to it," Dotson said. "New York is the financial center of the world. As we matured as a company, we thought it was very important to be identified with that."

To increase public awareness, Dotson said, ETrade is budgeting about $90 million for advertising this year, up more than 40 percent from 2003.

ETrade, the third-largest online broker behind Ameritrade Holding Corp. and Charles Schwab Corp., has broadened its reach to a fuller range of online financial services. Now the eighth-largest U.S. savings bank, ETrade offers checking accounts, credit cards, home mortgages, consumer loans and a network of 15,000 ATMs.