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Carburton Street, London – Egg (LSE: EGG), the Internet bank, issued a trading update today ahead of its close period for the year ending December 31, 2000. The company said the total number of unique customers rose from 1.21m on 30th September to 1.33m at December 11, 2000. New services have been rolled out over the year, which include an online mutual fund supermarket, a share dealing service and an online insurance supermarket. The latest development from the company was a joint venture with Boots (LSE: BOOT), which offered a co-branded Egg/Boots credit and loyalty card. Why have the shares been rising? Shares in Egg ticked up again today, the sixth day in a row that the value of the company has been on the up. Unfortunately investors in the Internet bank, who have been loyal to the company since its initial public offering at 160p, have seen their investment almost halve in value. Over this period, the value of the company has fluctuated wildly and appears to rise and fall on each and every piece of information, misinformation or rumour emanating from the company or the media. What we tend to forget is that this is a new and innovative business operating in virgin territory. It was one of the first standalone Internet banks and certainly one that has been growing at a rate of knots. Since the first quarter of this year, the number of unique customers has grown by over 34%, just over 10% a quarter when compounded. At this rate of growth, Egg expects to break even by the fourth quarter of 2001. Cross-buying within the existing customer base has continued to increase and it will be through this channel that Egg will be able to demonstrate the scalability of its operation. It is also through cross-buying that the company will be able to improve margins and power ahead to break even by its stated date. Last month, chief executive Mike Harris was reported to be looking at a "skinny branch network" across the UK. This shift in strategy aims to provide a branch network of booths in supermarkets and shopping malls. A poll on the Egg discussion board appears to endorse such a strategy but this could well be a retrograde step for Egg and could push back its break even target date. Egg is an Internet bank and should stick rigidly to its business plan. The Government's Communication White Paper, issued this week, could well see a proliferation of Internet users in the UK. Egg should stick to what it does best; it could be one of the main beneficiaries of the relaxation of communications legislation in the UK. Where Next? Egg discussion board | website