E *TRADE Financial Corp.-2004

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E TRADEFinancialCorp.-2004

• Presented by
• Megan Dow, Kristin Belanger, and
• Angèle Bourgoin

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Overview of ETRADE Presentation

• Overview of ETrade
• History
• Stocks
• Stock Information
• Goals and Objectives
• The Two Divisions
• Banking
• Brokerage
• BCG
• Their Mission and Vision Statement
• New Mission and Vision Statement
• External Opportunities and Threats
• CPM
• EFE
• Internal Strengths and Weaknesses
• IFE

• Analysis
• SWOT Matrix
• SPACE
• IE Matrix
• Grand Strategy Matrix
• Key Ratios
• Different Strategies
• QSPM
• Decisions
• Implementation
• Evaluation
• Update!
• References

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Overview of ETrade

• ETrade Financial Corp. or known as ETrade Group
  Inc. (changed name later on) in an online
  brokerage firm that trades equities, keeps
  portfolios updated and obtains market
  information.
• ETrade receives commission from each trade
• ETrade offers 15,200 ATM Machines
• ETrade is becoming a complete financial support
  by offering every service you need in your
  financial life.

• ETrade is active in 10 other countries
• Germany
• Australia
• Canada
• New Zealand
• Denmark
• Hong Kong
• Japan
• Korea
• Sweden
• United Kingdom

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History

• Founded by Bill Porter, a physicist inventor in
  1982.
• There was an opportunity to capitalize on
  potentially discount brokerage so Bill Porter
  came up with the idea that allows individuals to
  use their own personal computers to invest, and
  this would pay less that traditional brokerage
  fees.
• In 1992 the company became ETrade Securities
  Inc. and began offering online investing services
  through AOL and CompuServe.

• 1996
• There was an increase in ETrade services by them
  launching www.etrade.com website.
• In August the Company went public (IPO) and had
  another stock offering 1 year later when Porter
  handed the company over to Christos Cotsakos.
• Cotsakos has over 20 years of senior management
  experience at Federal Express and A.C. Neilson
• Under new guidance ETrade became a global leader
  in online personal financial services with
  branded web sites around the world.

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History Continued

• 2000
• ETrade bank introduced the first purchase of
  Telebanc Financial (now ETrades Financial) an
  online bank with more than 100,000 deposits.
• ETrade bought Card Capture Services (now ETrade
  Access) the operator of 9,000 ATMs across the
  U.S.
• ETrade acquired Canadian firm VERSUS
  Technologies a provider of electronic trading
  services.
• The International Capital announced plans to
  offer IPO to European Investors

• 2001
• ETrade entered consumer leading business when
  acquired online mortgage originator Loans Direct
  (now ETrade Mortgage).
• ETrade Mortgage had 3,400 employees at the end
  of 2003 which was only down 5 employees from 2003
• 2003
• revenues increased to 2008 Million and net
  income increased to 203 Million.

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Info about ET

• Traded on NYSE under symbol ET
• Before 2/15/01 traded on Nasdaq under EGRP
• The option symbol is ET plus 2 letters indicating
  month strike price.
• The first IPO 8/96 net proceeds 46.4 million
• The secondary IPO 8/97 net proceeds 188.8 million.

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Goals and Objectives

• Goals
• To provide financial solutions to retail and
  institutional customers globally.
• In the Internet economy, the only competitive
  advantage is speed. Weve got to move quickly and
  powerfully with one another to achieve our goals.
  We must operate in a global context always ready
  to adapt to emerging opportunities. We thrive on
  chaos. We feel empowered to act quickly and
  adjust as often as needed. And if we fail, we
  learn from it and restart in the direction of our
  goals. We are risk-takers.
• Objectives
• Offers retail investing, trading products,
  services with automated order placement and limit
  equity, futures, options, exchange-traded funds,
  bond orders real-time streaming quotes,
  commentary, and news advanced trading platforms,
  for traders, personalized portfolio tracking and
  access to more than 7,000 mutual funds.

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Divisions of ET

• Banking
• Includes the ETrade Bank
• Access to 15,200 ATMs
• VERSUS Technology
• TIR Holding Limited
• The service center for institutional investors,
  comprises the Global Institutional segment

• Brokerage
• Cash accounts or also called a margin account,
  with or without the options trading feature.
• Has ETrade Securities and ETrade Clearing as
  protection agencies within the division

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BCG

• Due to unforeseen circumstances the financials
  for both Banking and Brokerage divisions do not
  exist. The revenue for both divisions is combined
  into one. Without the required information we
  were unable to actually do a BCG. Thank you for
  your understanding. ?

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Their Mission Statement

• Using technology to set the standard for
  innovation, service, and value for investors
  seeking more control over their investments.
  ETRADEs rich suite of products and services can
  be customized to reflect a customers unique
  needs and interests, including portfolio
  tracking, free real-time quotes, market news, and
  research available 24 hours a day, seven day a
  week. Customers can assess their ETRADE
  accounts virtually any time anywhere around the
  world.

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Their Vision Statement

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

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New Mission Statement

• ETRADE provides is an online brokerage firm for
  anyone and everyone concerned with their
  financial freedom, it allows you to trade
  equities, create a portfolio, get market
  information any day at anytime around the world,
  and much more. With our technology to set the
  standard to be innovative, service and control
  over the investors investment, this will help us
  grow as a company in becoming a complete
  financial support business offering every service
  you need in your financial life, while making our
  customers, stockholders and employees happy. We
  help the communities through non-profit
  partnership, volunteer work, and increase
  financial literacy in the neighborhoods. In
  becoming more profitable, we set ourselves apart
  from tradition brokerage firms, we have huge
  discount brokerage fees to help customers be more
  affordable.

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New Vision Statement

• To become the a leading and complete financial
  support and execution portal for individuals, by
  diversifying and offering every service you need
  in your financial life, with access to your
  accounts anytime, anywhere in the whole world.

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Key External Factors

• Opportunities
• Commission revenues increased, declining volatile
  stock prices
• Businesss turn to ETRADE because of other
  unethical businesss, gaining customers
• Stock markets have remained turbulent
• Excited market overseas, slightly better
• Expanded into new businesss
• 2nd largest market share in the industry

• Threats
• U.S economy may fall back into recession
• Lowered interest rates
• Geopolitical fears
• Numerous corporate scandals, investor confidence
• Aggregate pretax profits, fell 33
• Investment Services Industry fell 24
• Market for electronic financial services are
  growing rapidly, more competitors

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EFE
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CPM
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Key Internal Factors

• Strengths
• Rich suite of products financial services on the
  internet
• Access to accounts 24/7, 7 days a week
• Discount on brokerage fees
• Located and have access throughout the world
• ATMs located around the world
• You can do your financial services yourself in
  your home
• Incurred 227 million to restructure its
  operations

• Weaknesses
• Does not have as many services as a traditional
  brokerage firm
• Distribution of money, expenditures
• Revenue is falling
• Regaining the investors confidence back

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IFE
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SWOT
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SPACE
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IE Matrix
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Grand Strategy Matrix
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Key Ratios

• Rev 1.63B
• Market cap 11.24 B
• Return on assets 1.18
• Return on equity 15.86
• REV. per share 4.388
• Total Debt 17.39 B
• Total debt to equity 5.114
• Operating Cash 568.77M

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Different Strategies

• Acquire other firms in order to diversify the
  services offered to clients
• To restructure the internal organization of
  ETrade in order to compete with competitors

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QSPM
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Decisions

• Restructurization of the internal aspect of
  ETrade
• QSPM numbers signify this

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Implementation

• Distribute the money throughout the company
• Include everyone involved with Etrade to put
  suggestions where the company needs to be
  reformed
• Short term
• Long term

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Evaluation

• Re-evaluating the strategic plan
• Financials for money flow
• Quarterly reports
• Competitors
• Work on any suggestions that continue to appear

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Update!

• As of this year ETrade is 5th in the Top
  Investment Brokerage Firms

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References

• http//www.etrade.com
• http//finance.yahoo.com
• Strategic Management Concepts and Cases