Fifteen-year-old ShareData offers online option management programs and makes software for tracking corporate stock plans. The Santa Clara, California-based company posted revenues of about $12 million in 1997.
E*Trade will offer 1.3 million shares to the security holders of ShareData, but officials said the final per-share sale price will not be determined until September 30, the end of E*Trade's fourth fiscal quarter. E*Trade shares were down slightly today, closing at 22.25, off .25 from Thursday's final bell. The stock has traded as high as 47.875 and as low as 17.375 during the past 52 weeks.
The company sees the ShareData acquisition, slated to be finalized during the next three months, as a way to solidify its place in the corporate services market. Until recently, E*Trade mostly had made a name for itself by targeting individual investors, offering online stock trades for as little as $14.95.
"This allows us to leverage our core competency of an all-electronic model," said Steve King, E*Trade's vice president.
In December, E*Trade bought OptionsLink, an Internet-based stock option information service, from Hambrecht & Quist. But the service had only 100 customers, while ShareData has 2,500 customers representing 2.5 million accounts.
"This is a much larger step into that corporate market," King said.
Added Randall Roth, an analyst with Greenwich, Connecticut-based Renaissance Capital: "It's pretty shrewd. People will be able to have their stock options and personal investment portfolios with E*Trade. If they don't already have an online account, this may be an incentive."
Roth said E*Trade is trying to tap into the rising trend of equity-based compensation, in which companies offer stock options in addition to salary.
"Once you sign up a company you get all the employees," Roth added. "It's like, buy one, get the second one free, and that will help [E*Trade] generate revenue through more transactions."
The Palo Alto, California-based E*Trade has worked feverishly to offer new services in order to ward off fierce competition from as many as 70 other online investor sites. During recent weeks, E*Trade has unveiled plans to expand overseas, by way of joint ventures in Japan and the U.K.
The ShareData transaction will be accounted for as a pooling of interests.