Posted by
alfredlester on Wednesday, January 20, 2010 5:24:56 AM
LONDON (MarketWatch) -- German stock exchange operator Deutsche Boerse warned late Tuesday that it would book a 420 million euro ($600 million) impairment charge for 2009 due to a slowdown at the International Securities Exchange, its U.S. equity options business.
The charge will be partially offset by a 180 million euro tax credit, leading to a 200 million euro reduction in net profit for the year, the exchange said.
Deutsche Boerse , which bought ISE in 2007, said the charge "reflects stagnation in the U.S. equity options market in 2009 and a revenue decline at ISE during the course of the year."
However, it also reassured investors that strong cash flows mean it will still be able to propose a dividend in line with the 2.10 euros it paid for 2008.
Citigroup analyst Daniel Garrod said the fact that ISE is being impaired probably shouldn't come as surprise, since other exchange deals -- including the merger that created NYSE Euronext and the London Stock Exchange's acquisition of Borsa Italiana -- have been written down free credit score online.
The impairment was likely triggered by a decline in margins and a loss of market share at ISE, Garrod said. He added that because it's a non-cash charge, the market likely won't attach too much significance to it, but that it could still indicate a poorer outlook for the ISE.
Shares in Deutsche Boerse slipped 0.3% on the German Xetra market.
Analysts at Deutsche Bank said the impairment may reduce short-term growth expectations for U.S. derivatives volumes.
The broker said it should all induce Deutsche Boerse management to take a firmer stance on price when looking at any new takeover opportunities that arise in the exchange market.
Deutsche Boerse warns of impairment on U.S. arm