StreetAdvisor.com...
2. E*TRADE STEPS OFFLINE
By Scott Greenberg
Related Articles: streetadvisor.com
E*Trade (EGRP) announced the acquisition of Card Capture Services, which
is the largest independent network of centrally-managed automated teller
machines (ATMs) in the US. The move doesn't vault E*Trade past our
current favorites in the sector -- Schwab (SCH) and TD Waterhouse (TWE) --
but it helps close the gap. Currently, Card Capture's network consists of
8,500 ATMs in 48 states and three countries. Only Bank of America and
American Express own more machines. Most of these ATMs are not in banks.
They are in shopping malls, hotels, grocery and convenience stores, and
gas stations. Financial terms of the deal were not disclosed.
This savvy move by E*Trade hints at what's to come, as deregulation under
the Glass-Stegall Act becomes reality. We expect this acquisition will be
accretive to earnings, but more importantly, it gives E*Trade points of
presence off the web. This is one of the reasons we haven't recommended
it over Schwab and TD Waterhouse, which have both major on- and offline
presences. There are moves to outlaw surcharges in some states and this
could hurt Card Capture's revenues, but the strategy behind this
acquisition is much more critical than any of the immediate gains in
revenue.
E*TRADE is not the gorilla that Schwab is, so we cannot justify paying the
premium that we would to own Schwab, and TD Waterhouse remains a better
value purchase than E*Trade. But E*Trade is making moves that merit some
attention, and we'll be watching closely.
Go to chart: streetadvisor.com |
