* Analyst estimates range fom 250-578 million euros
* ISE is now No.4 in U.S. options market
* Shares down 0.8 percent, underperforming main index
By Harro ten Wolde
FRANKFURT, Oct 28 (Reuters) - Deutsche Boerse may be forced to write down more than half of the value of the International Securities Exchange (ISE), its struggling U.S. equity options platform, analysts said on Thursday.
The looming impairment at ISE was announced late on Wednesday and overshadowed third-quarter results, which were slightly better than expected.
"The possible impairment on ISE's intangibles is the negative surprise of the quarter," said Christian Muschick at Silvia Quandt Research.
ISE, which Deutsche Boerse acquired in 2007 for $2.8 billion, is struggling to hold on to market share amid cutthroat competition from competitors Nasdaq OMX, NYSE Euronext and the Chicago Board Options Exchange (CBOE).
A charge would follow on from a 415.6 million euro charge Deutsche Boerse booked in the fourth quarter of 2009.
"While rumours concerning this possibility circled around the market for some time, we believed that the company was more conservative when calculating the first impairment in the fourth quarter of 2009," Muschick added.
Deutsche Boerse shares fell 0.8 percent by 1148 GMT, the third-biggest decliner in a 0.5 percent higher German blue-chip index.
The bourse operator has about 850 million euros in intangible assets and around 900 million euros in goodwill for ISE. A goodwill impairment charge is seen unlikely as it relates to the total Eurex derivatives segment, which is doing much better than ISE.
Analyst estimates for the intangibles impairment range from 250 million euros to 578 million euros.
ISE, which opened in 2000, was the U.S. options industry's first all-electronic exchange. It rapidly ate away at CBOE's market dominance, particularly after the industry settled an anti-trust probe by the U.S. Justice Department that forced the options exchanges to compete directly with one another.
In a few years ISE was No. 2 to CBOE's No. 1 in the market, but its market share fell rapidly from 2009 to 2010.
It dropped to about 18 percent in September 2010 from around 25 percent in September 2009, based on figures from the Options Clearing Corp, which clears for all U.S. options exchanges.
ISE is now No. 4, behind Nasdaq OMX Group's combined share from its two options markets, CBOE at No. 2, and NYSE Euronext's combined volume from its two venues.
Deutsche Boerse has blamed some of its market share declines on the rise of low-risk, high-volume, and low-revenue-producing trading tied to bets on company dividend payouts which are encouraged at some of its rivals.
The Frankfurt-based operator has criticised these so-called dividend trades as providing little economic value and hurting market integrity.
Deutsche Boerse said one of the main reasons for the potential impairment is an ongoing discussion with the U.S. Securities and Exchange Commission (SEC) to get permission to restart the offering of crossing orders which were forbidden by the SEC in 2009, but remained possible at floor exchanges.
UniCredit's Bernd Mueller-Gerberding said an impairment is inevitable and estimated it at 578 million euros.
"Only a very strong increase in fourth-quarter volumes, maybe in combination with a positive SEC decision on crossing (orders) and price policy, could get the impairment off the table," he said, maintaining his "buy" rating with a 65 euro price target.
Deutsche Boerse shares are down 12 percent this year, underperforming the FTSE/Mondo Visione Exchange index, which has advanced 6.5 percent. (Additional reporting by Ann Saphir in Chicago and Anika Ross in Frankfurt; Editing by Michael Shields) ($1=.7242 Euro)