ETRADE FINANCIAL CORP.

1
ETRADE FINANCIAL CORP.

• By
• Louise Philbrick
• Keith Grant
• David Guerra

2
Overview

• Current Condition
• Vision and Mission
• External Factors
• CPM
• EFE
• Internal Factors
• IFE
• Analysis
• Key Ratios
• SWOT Matrix
• Space Matrix
• BCG
• IE Matrix
• GSM

• Possible Strategies
• Recommendations
• Evaluation

3
ETRADE Overview

• Etrade Financial Corp., is a diversified
  financial services holding company, by and
  through its subsidiaries, is a global provider of
  financial services to retail, corporate and
  institutional customers. Building on our
  foundation in online investing, we have expanded
  to provide retail customers with an integrated
  and personalized suite of investing, banking,
  lending, planning and advice services primarily
  through online channels, under our new brand,
  "ETRADE FINANCIAL.

4
History of Etrade

• 1982, founded as a service bureau by inventor and
  physicist, Bill Porter
• 1992, ETrades Securities Inc. was born to start
  online investment services
• 1996, ETrade moved public
• 1997 Porter appointed Christos Cotsakos as CEO
• 2000, ETrade purchased Telebanc Financial and to
  become known as ETrade Financial
• 2001 ETrade acquired Online Mortgage originator
  LoansDirect, and is now known as ETrade Mortgage

5
What ETrade is today

• ETrade is active in Germany, Australia, Canada,
  New Zealand, Denmark, Hong Kong, Japan, Korea,
  Sweden, and the United Kingdom
• ETrade is in a Process of searching for a new
  advertising agency to replace the current Goodby,
  Silverstein Partners
• Etrade owns and operates over 15,200 Automated
  Teller Machines
• ETrade is becoming a complete full service
  financial support and execution portal for
  individual investors

6
Stock Price Performance
7
Important ETrade facts

• 2003 ETrades revenues rose to 2008 million and
  net income rose to 203 million despite a
  reduction in the number of employees by only 5
  from the previous year
• ETrades major competitors are Schwab,
  Ameritrade, JB Oxford Holdings, Financial
  Institutions, and AB Watley Group
• ETrade is trying to regain investor confidence
  after former CEO Christos Cotsakos received a
  2001 pay package valued at 80 million even as
  the companys share price plummeted
• ETrade discontinued advertising in the Super
  Bowl in 2001

8
ETrades goals and objectives

• To be the global leader in online financial and
  investment services
• To commit to helping our customers of all ages
  achieve their financial goals by using
  state-of-the-art technology
• Provide a continuous improvement environment for
  our customers, employees, and stockholders
• Provide career opportunities for employees and
  profitable growth for shareholders
• Operate using the highest ethical ideals
• Strive to improve the quality of life for
  citizens within the communities and countries we
  serve

9
Vision statement (Proposed)

• ETrades vision is to empower self-directed
  investors to make informed investment decisions
  and to take control of their financial future
  with anytime, anywhere access to the worlds
  major investment markets

10
Mission Statement

• To create long term shareholder value through
  superior financial performance driven by the
  delivery of a diversified range of innovative,
  customer-focused financial products and services
  and supported by an operating culture based on
  the highest levels of teamwork, efficiency and
  integrity.

Source www.etrade.com
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Competitive Profile Matrix
12
External Audit
13
External Factors Evaluation Matrix
14
EFE Matrix Concluded
15
Internal Audit
16
Internal Factors Evaluation Matrix
17
IFE Matrix Concluded
18
Key Financial Ratios
19
Key Ratios Concluded
20
S.W.O.T Matrix
21
S.W.O.T Matrix Concluded
22
Space Matrix
23
Boston Consulting Group Matrix
High
Medium Low
1.0
.50
0
High
20
27
27
73
73
Medium
0
Low
-20
24
IE Matrix
25
Grand Strategy Matrix

• Concentric Diversification
• Horizontal Diversification
• Conglomerate Diversification
• Joint Venture

26
Possible Strategies

• Increase European Dominance
• Make attempts to acquire TD Waterhouse from
  Toronto-Dominion Bank
• ETrade should look into broadening their
  International presence
• Use debt financing to improve computer system to
  ensure that their website is secure and capable
  of handling numerous transactions
• Increase customer base, by increasing awareness
  through stronger advertising

27
Decisions

• Primary
• Increase presence and awareness in the European
  Market
• Possibilities
• Improve current E-Commerce infrastructure to be
  certain that their website is not only secure,
  but capable of handling numerous transactions
• Attempt to acquire another online brokerage firm
• Pay dividends in attempt to increase stock price
  to raise capital

28
Implementation

• Use revenues generated from European transactions
  to acquire at least 8,000 more ATMs in the
  European Market to help expand its global
  business within the next 2-3 years
• Use capital obtained from stock revenues to
  improve computer infrastructure
• Acquire TD Waterhouse within 3 years
• Increase promotion of enhanced online banking
  platform domestically and globally

29
2004 Financial Statistics

• Net Income- 380.5 million
• Total Revenue- 2,083 million
• EPS- 0.92
• Total Debt- 585.6 million
• EBIT- 1071 million
• Working Capital 1,021.2 million
• Common Shares outstanding- 366.59 million
• Operating Income- 1,111.3 million