Barry Ritholtz sees very little value in the proposed merger of E*trade (NYSE: ET) and Ameritrade (NASD: AMTD). Like HP and Compaq before them it's another case of two commodity business joining hands to accomplish nothing, he argues.
Putting these two firms together might eliminate some costs, but hardly enough to justify a merger - and not even of equals. How much expense is there running these firms (although we do know they both spend a boatload on advertising). Ameritrade is primarily an online trading house, doing less than a Billion per year in revenues. E*Trade has more than $2 billion in revs, and is far more diversified into banking, lending and other financial products than Ameritrade.
Whether these companies are together or apart the issue of commoditazation and falling prices remain an issue. Perhaps a merger is justified if only to eliminate redundant advertising costs.