Summary

Other Scenarios:

Buyer: E TRADE Financial Corporation (ETFC) Last Price: 1.35 Market Cap.: 725.96M
Target: TD Ameritrade Holding Corp. (AMTD) Last Price: 12.31 Market Cap.: 7.29B

Lines of Business Summary:

Product Summary:

Overlap & Complementary Sectors

Sector Buyer Target # of Focused Companies
Finance 1,234
Banking   640
Domestic Banks   603
Commercial Banks   406
Investment 131
Asset Management and Financial Advisory 76
Institutional/High-Net Advisory   8
Instruments   52
Retail Advisory   1
Securities Sales and Trading 32
Brokerage Services 21
Trading   4
Specialty Finance   63
Consumer Loans   25
Automobile Financing   8
Personal   0
Mortgage Banking and Real Estate Financing   12
Financial Services   11
Technology   935
Software   268
Enterprise Management   68
Enterprise Resource Planning (ERP)   26

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Sample Products in Similar Lines of Business

Sample Products in Complementary Lines of Business
Buyer (Total: 10)
  • E*TRADE Capital Markets, LLC
  • E*TRADE Securities LLC
Target (Total: 7)
  • Ameritrade Corporate Services
  • Ameritrade Plus
  • Ameritrade
  • TD Ameritrade Holding Corporation
Buyer
  • E*TRADE Bank
  • Kobren Insight Management
  • Howard Capital Management
  • E*TRADE Capital Markets - Execution Services
Target
  • Ameritrade Advisor Services

Business Relationship Summary:

Top Key Suppliers

Top Key Customers
Buyer (Total: 6)
  • Cognizant Technology Solutions Corp. (CTSH)
  • Mack-Cali Realty Corp. (CLI)
  • TiVo Inc. (TIVO)
  • Evercore Partners Inc. (EVR)
Target (Total: 1)
  • KANA Software, Inc. (KANA)
Buyer (Total: 0)

n/a
Target (Total: 0)

n/a

Key Financial Summary:

Key Metrics

  Buyer Target
Number of Employees 3,108 3,882
Revenue Per Employee 700,887.3 689,116.9
Total Revenue 657.0 681.8
Total Expenses 1,093.0 403.0
Other Revenue 13.0 7.9
Cost of Revenue 469.4 225.0
SG&A Expense 30.4 75.3
Research & Development 0.0 0.0
Other Operating Expense 559.2 25.5
Operating Income -436.0 278.7
Unusual Income 5.5 35.6
LT Debt to Capital 74.62 33.05
Fwd P/E -1.27 10.41
Fwd P/Rev 0.69 3.07
Book Value 2,537.1 2,925.0
Curr Portion of LTD/Cap Lease 0.0 0.0

Individual Company Summary

Focused

Buyer

Focused (): Finance > Investment > Securities Sales and Trading > Brokerage Services > Retail Brokerage Services

Target

Focused (): Finance > Investment > Securities Sales and Trading > Brokerage Services > Retail Brokerage Services

Business Description

Buyer

E*TRADE Financial Corporation (E*TRADE) is a global financial services company, offering a range of financial solutions to customers under the brand E*TRADE FINANCIAL. Its financial solutions include a suite of trading, investing and banking products. Its primary retail products and services consist of trading and investing, and banking products. Trading and investing includes automated order placement and execution of United States and international equities, currencies, futures, options, exchange-traded funds, mutual funds and bonds. Banking includes checking, savings, sweep, money market and certificates of deposit (CD) products that offer online bill pay, quick transfer, unlimited automated teller machines (ATM) transactions on eligible accounts and wireless account access. Lending includes margin and credit card products that offer online loan status and quick transfer.

Target

TD AMERITRADE Holding Corporation is engaged in providing securities brokerage services and technology-based financial services to retail investors and business partners, predominantly through the Internet, a national branch network and relationships with independent registered investment advisors (RIAs). The Company offers touch-tone trading, trading over the Internet, unlimited, streaming, free real-time quotes, extended trading hour, direct access and commitment on the speed of execution to its customers. As of January 24, 2006, the Company acquired the United States brokerage business of TD Waterhouse Group, Inc. (TD Waterhouse). The client offerings include TD AMERITRADE, TD AMERITRADE Institutional, TD AMERITRADE Izone, Amerivest, TDAX Independence ETFs and TD AMERITRADE Corporate Services. The products available to the clients include common and preferred stock, exchange-traded funds, option trades, mutual funds, fixed income, margin lending and cash management services.

Deal Summary

Key Ratios

  Buyer Target
Gross Margin % -84.28 65.24
Operating Margin % -246.37 45.3
Quick Ratio 0.68 1.12
Current Ratio 0.68 1.12
Coverage Ratio 0.1 0.06
Total Assets 49,705.0 15,951.1
Return on Equity % -88.49 27.48
Return on Assets % -4.52 5.04
Cash+ ST Inv. Per Share 6.1 1.55
Total Debt 14,520.1 1,444.0
Total Debt to Equity % 572.3 49.37
Total Debt to Tangible Equity % 7,085.9 n/a
Debt to Asset % 29.21 9.05

Product Summary

Sector Buyer Target
Finance
Banking  
Domestic Banks
The Domestic banking sector includes banks operating in the United States.
  
Investment
Asset Management and Financial Advisory
The Asset Management and Financial Advisory branch profiles services and companies involved in directly managing personal and institutional portfolios and investment instruments, as well as advisory services like retirement and financial planning, asset allocation, and risk assessment. Banks are generally not attached to the Asset Management and Financial Advisory branch unless their asset management or financial advisory subsidiaries clearly operate with a significant level of independence from the company's core banking operations.
Securities Sales and Trading
The Investment sector encompasses financial products and services offered by financial institutions on behalf of clients. Services included asset management and financial advisory, investment banking and corporate finance, and securities sales and trading.
Specialty Finance  
Consumer Loans
Consumer loans are made for the purpose of financing the purchase of consumer goods, home improvements, and other personal needs, and are generally secured by the personal property being purchased.
  
Mortgage Banking and Real Estate Financing
Real Estate encompasses residential and commercial financial services, loan servicing, and valuation and appraisal services.
  
Technology  
Software  
Enterprise Management
Software designed to maximize the efficiency and productivity with which the enterprise is run. Includes Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) software.
  

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Product Details

Sector Buyer Target
Finance
Banking  
Domestic Banks  
Commercial Banks  
Internet Banks
Commercial banks that conduct their operations online. This does not include the internet operations of brick and mortar commercial banks.

Buyer Products:

  • E*TRADE Bank
  
Investment
Asset Management and Financial Advisory
Institutional/High-Net Advisory
Hierarchy level includes financial advisory and/or asset management services for institutional clients, as well as personalized wealth management and financial advisory services targeted exclusively at high net worth individuals.

Buyer Products:

  • Kobren Insight Management
  • Howard Capital Management
  
Instruments  
Funds  
Equity Funds
Companies placed at this level develop, manage, market and support equity mutual funds. Mutual Funds are funds invested in domestic and international equities. Blended funds consisting of both equity and debt components are also included. Mutual funds generally have clearly stated investment objectives, including benchmark indexing, a growth or value bias, or an industry focus.

Buyer Products:

  • Kobren Insight Management
  
Retail Advisory
Retail Advisory services includes a range of wealth management, retirement planning, trust, and financial advisory services targeted primarily at individuals and families. Companies and service offerings placed at this level may include some high net worth clients, but the services are generally accessible to investors with more moderate levels of wealth and income.

Target Products:

  • Ameritrade Advisor Services
  
Securities Sales and Trading
Brokerage Services
Institutional Brokerage Services
High volume brokerage and related support services targeted primarily at investment professionals and institutions.

Buyer Products:

  • E*TRADE Capital Markets, LLC
  • E*TRADE Securities LLC

Target Products:

  • Ameritrade Corporate Services
Retail Brokerage Services
Brokerage services targeted primarily at retail and active traders. Online brokerages are inlcuded. Also includes brokerage and other support services offered to registered investment advisors (RIAs).

Buyer Products:

  • E*TRADE Securities LLC

Target Products:

  • Ameritrade Plus
  • Ameritrade
  • TD Ameritrade Holding Corporation
  • Ameritrade Izone
  • Amerivest
Trading  
Specialists
Specialists are members of the exchange to which they apply in order to be assigned stocks to handle. Their functions are to serve as brokers to match buy and sell orders and to handle special limit orders placed with member brokers. Specialists also act as dealers to maintain a fair and orderly market by providing liquidity when the normal flow of orders is not adequate.

Buyer Products:

  • E*TRADE Capital Markets - Execution Services
  
Specialty Finance  
Consumer Loans  
Automobile Financing
A loan offered to consumers in order to finance the purchase of new and used automobiles and recreational vehicles. The loan is secured by a lien on the automobile.

Buyer Products:

  • E*TRADE Consumer Finance Corporation
  
Personal
A loan offered to consumers for general purposes, including debt consolidation, education, and other personal uses. Loan repayment is on an installment basis. The personal loans are typically made on an unsecured basis.

Buyer Products:

  • E*TRADE Consumer Finance Corporation
  
Mortgage Banking and Real Estate Financing  
Financial Services  
Residential  
Home Equity
A loan or a line of credit that allows a homeowner to use the equity in the property. When a loan is made, the lender places a lien against the house. In the case of default, the First Mortgage has a priority of claim over the lien that secures a Home Equity Loan.

Buyer Products:

  • E*Trade Mortgage Corporation
  
Mortgage Origination
Residential Mortgage Origination is the process of underwriting, closing and funding mortgage loans in-house. The originator obtains a pricing premium compared to wholesale mortgage pricing, because they have the financial backing to accept the risk associated with non-performing loans. Non-REIT companies engaged in investing in residential mortgage securities are also included.

Buyer Products:

  • E*Trade Mortgage Corporation
  
Real Estate Loans
Real estate loans consist of loans secured by residential real property and loans for the construction of residential property.

Buyer Products:

  • E*Trade Mortgage Corporation
  
Technology  
Software  
Enterprise Management  
Enterprise Resource Planning (ERP)  
Human Resources  
Benefit/Payroll Management
Software that aids in the management of the workforce, performing functions such as benefit and payroll management.

Buyer Products:

  • Equity Edge
  • Advantage@Work
  

- Focused. Denotes that the company is considered focused in this area. In general, Focused Companies draw the majority of their earnings in the sector/product area specified.

- Sector Pure-Plays. Denotes that the company is focused in the selected sector and generates nearly all earnings in the sector/product area specified.

- Sector Participation. Denotes that the company develops products in this line of business.

Relationship Details

Key Competitors

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Overlap
  optionsXpress Holdings, Inc. n/a 912.403 9.20 10.40 3.54 3.82 4.15
thinkorswim Group Inc. n/a 425.599 6.29 7.02 1.12 1.20 n/a
TradeStation Group, Inc. n/a 275.266 8.51 9.75 1.73 1.86 1.72
Siebert Financial Corp. n/a 43.307 43.42 n/a 1.31 n/a 1.05
Track Data Corporation n/a 12.001 5.00 n/a 0.38 n/a 0.54
Buyer
  TD Ameritrade Holding Corp. n/a 7,293.889 9.07 10.41 2.62 3.07 n/a
optionsXpress Holdings, Inc. n/a 912.403 9.20 10.40 3.54 3.82 4.15
Interactive Brokers Group, Inc. n/a 771.232 8.42 9.01 0.34 0.44 1.57
thinkorswim Group Inc. n/a 425.599 6.29 7.02 1.12 1.20 n/a
TradeStation Group, Inc. n/a 275.266 8.51 9.75 1.73 1.86 1.72
Porter Bancorp, Inc. n/a 140.810 9.20 9.01 1.38 2.55 1.36
The Bancorp, Inc. n/a 46.168 26.91 20.06 0.46 0.79 0.41
Siebert Financial Corp. n/a 43.307 43.42 n/a 1.31 n/a 1.05
Track Data Corporation n/a 12.001 5.00 n/a 0.38 n/a 0.54
Target
  Citigroup Inc. n/a 51,879.621 n/a -4.24 0.45 0.69 0.82
Merrill Lynch & Co., Inc. n/a 21,116.463 n/a -1.13 0.68 3.32 0.63
The Charles Schwab Corporation n/a 19,187.872 15.83 16.88 3.68 4.00 5.43
optionsXpress Holdings, Inc. n/a 912.403 9.20 10.40 3.54 3.82 4.15
E TRADE Financial Corporation n/a 725.963 n/a -1.27 0.57 0.69 3.54
thinkorswim Group Inc. n/a 425.599 6.29 7.02 1.12 1.20 n/a
TradeStation Group, Inc. n/a 275.266 8.51 9.75 1.73 1.86 1.72
Siebert Financial Corp. n/a 43.307 43.42 n/a 1.31 n/a 1.05
Track Data Corporation n/a 12.001 5.00 n/a 0.38 n/a 0.54
Fidelity Investments (FMR Corp.) n/a n/a n/a n/a n/a n/a n/a
Scottrade n/a n/a n/a n/a n/a n/a n/a

- Defined by the Company - Defined by Others

Dependent Suppliers

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Buyer
  Cognizant Technology Solutions Corp. n/a 4,912.331 11.84 12.43 1.84 1.87 2.99
Mack-Cali Realty Corp. n/a 1,281.350 17.87 6.08 1.61 2.05 0.81
TiVo Inc. n/a 598.812 n/a -69.78 2.17 2.52 22.99
Evercore Partners Inc. n/a 246.641 65.58 18.04 0.87 1.11 n/a
Unica Corporation n/a 110.828 961.23 -617.00 0.91 1.05 3.31
Salary.com, Inc. n/a 36.155 n/a -1.43 0.94 0.76 2.22
Target
  KANA Software, Inc. n/a 26.788 n/a 34.00 0.39 0.40 n/a

- Defined by the Company - Defined by Others

Key Customers

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value

- Defined by the Company - Defined by Others

Key Partners

  Name Dir Percent Market Cap. P/E Ratio (TTM) Fwd P/E P/R Ratio (TTM) Fwd P/Rev Price To Tang. Book Value
Buyer
  Australia and New Zealand Banking (ADR) n/a 15,841.646 4.18 n/a 0.69 n/a 0.94
Federal Home Loan Bank n/a n/a n/a n/a n/a n/a n/a
Target
  Advent Software, Inc. n/a 554.155 33.58 38.41 2.22 2.35 6.85

- Defined by the Company - Defined by Others

Financials

  Buyer Target Combined Entity
Income Statement
Operating Items
Revenue 1,211.1 2,754.8 3,965.9
Other Revenue 54.3 32.2 86.5
Total Revenue 1,265.4 2,787.0 4,052.4
Cost of Revenue 2,331.9 968.9 3,300.8
SG&A Expense 172.1 281.6 453.7
Depreciation & Amortization 123.8 96.2 220.0
Interest Expense 0.0 78.4 78.4
Other Operating Expense 1,607.3 63.7 1,671.0
Unusual Expense (Income) 147.8 35.6 183.4
Total Expenses 4,382.9 1,524.4 5,907.3
Operating Income -3,117.5 1,262.6 -1,854.9
Non Operating Items
Interest Expense (Inc.), Net Non-Oprtng -300.6 0.9 -299.6
Other, Net 0.0 0.0 0.0
Income Before Taxes -3,418.1 1,263.5 -2,154.6
Income Taxes -1,173.1 459.6 -713.5
Income After Taxes -2,245.0 803.9 -1,441.1
Net Income - Excl. Xord. Items -2,245.0 803.9 -1,441.1
Discontinued Operations 296.9 0.0 296.9
Net Income - Incl. Xord. Items -1,948.1 803.9 -1,144.2
Income Avail. to Common -1,948.1 803.9 -1,144.2
Share Items
Basic Avg. Shares Outstanding 536.5 592.8 1,129.3
Basic EPS - Excl. Xord. Items n/a 1.36 -1.28
Basic EPS - Incl. Xord. Items n/a 1.36 -1.01
Full Dilution Adjustment 0.0 0.0 0.0
Fully Diluted Shares Outstanding 536.5 602.3 1,138.9
F.D. EPS - Excl. Xord. Items n/a 1.33 -1.27
F.D. EPS - Incl. Xord. Items n/a 1.33 -1.00
Balance Sheet
Assets
Cash and Equivalents 3,275.4 934.1 4,209.6
Accounts Receivable 5,619.6 11,138.7 16,758.3
Inventory 0.0 0.0 0.0
Other Current Assets 0.0 0.0 0.0
Current Assets 8,895.0 12,072.8 20,967.8
Accum D&A 0.0 0.0 0.0
PPE, Net 314.1 0.0 314.1
Goodwill & Intangibles 2,332.2 2,960.8 5,293.0
Long Term Investments 9,872.3 369.1 10,241.5
Other Assets 2,749.3 548.3 3,297.6
Other LT Assets 0.0 0.0 0.0
Total Assets 49,705.0 15,951.1 65,656.1
Liabilities
Accounts Payable 4,363.9 10,824.5 15,188.4
Payable/Accrued 1,668.3 0.0 1,668.3
ST Debt 7,062.1 0.0 7,062.1
Other (Current) Liabilities 0.0 0.0 0.0
Current Liab. 13,094.4 10,824.5 23,918.8
LT Debt 7,457.9 1,444.0 8,901.9
Total LT Debt 7,457.9 1,444.0 8,901.9
Other LT Liab. 26,615.6 757.5 27,373.1
Total Liabilities 47,167.9 13,026.0 60,193.9
Shareholders Equity
Common Stock 5.4 0.0 5.4
Additional Paid in Capital 3,612.3 0.0 3,612.3
Retained Earnings -570.2 0.0 -570.2
Other Equity -510.3 2,925.0 2,414.7
Total Equity 2,537.1 2,925.0 5,462.2
Total Liab. & Equity 49,705.0 15,951.1 65,656.1
Shares Outstanding 537.7 392.5 930.2
Cash Flow
Operating Cash Flow
CF Net Income -1,948.1 n/a -1,948.1
CF Depreciation 289.2 n/a 289.2
CF Deferred Taxes 0.0 n/a 0.0
Other Non-Cash Items 3,794.3 n/a 3,794.3
Change in Working Capital -693.6 n/a -693.6
Total Cash From Operating Activities 1,441.9 n/a 1,441.9
Investing Cash Flow (not calculated)
Capital Expenditures -108.0 n/a -108.0
Other Investing Cash Flows 9,839.3 n/a 9,839.3
Total Cash From Investing Activities 9,731.3 n/a 9,731.3
Financing Cash Flow (not calculated)
Dividends Paid 0.0 n/a 0.0
Purchase Or Sale of Stock 342.0 n/a 342.0
Purchase and Retirement of Debt 22.3 n/a 22.3
Other Financing Cash Flow -11,129.7 n/a -11,129.7
Total Cash From Financing Activities -9,421.7 n/a -9,421.7
Exchange Rate Effects -2.9 n/a -2.9
Net Change in Cash 1,748.6 n/a 1,748.6
Cash Taxes Paid -429.2 n/a -429.2
Cash Interest Paid 1,714.0 n/a 1,714.0