eTrade 2000 Annual Report Download - page 53

If we are unsuccessful in managing the effects of changes in interest rates, our financial condition and results of operations could
suffer.
The increased risk of charge-offs due to the Bank’s asset diversification could reduce our profitability
As the Bank diversifies its investment portfolio towards new higher yielding investment classes, we will have to manage assets that
may carry a higher inherent risk of default than experienced with our existing portfolio. Consequently, the level of charge-offs
associated with these assets may be higher than previously experienced. Though we believe that higher yields will compensate for
potentially higher risk, if expectations of future charge-offs increase, a simultaneous increase in the amount of our loss reserves would
be required. The increased level of charge-offs recorded to meet additional reserve requirements could negatively impact the results of
our operations.
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We could lose customers and have difficulty attracting new customers if we are unable to quickly introduce new products and
services that satisfy changing customer needs
Our future profitability depends significantly on our ability to develop and enhance our services and products. There are significant
challenges to such development and enhancement, including technical risks. There can be no assurance that we will be successful in
achieving any of the following:
effectively using new technologies;
adapting our services and products to meet emerging industry standards;
developing, introducing and marketing service and product enhancements; or
developing, introducing and marketing new services and products.
Additionally, these new services and products, if they are developed, may not adequately meet the requirements of the marketplace or
achieve market acceptance. If we are unable to develop and introduce enhanced or new services and products quickly enough to
respond to market or customer requirements, or if they do not achieve market acceptance, our business, financial condition and
operating results will be materially adversely affected.
We could be subject to litigation and our reputation may be harmed if our Business Solutions Group products fail or produce
inaccurate results
BSG provides products and services to assist companies to work effectively with their own professional legal, accounting and tax
advisors to comply with the laws, regulations, and rules pertaining to equity compensation. While BSG has taken reasonable
precautions to protect itself from liability exposure, product design limitations and/or potential human error while providing services
which, by their nature, are highly technical and intricate, could result in significant accounting and tax reporting inaccuracies, which
could subject BSG to customer litigation and damage our reputation.
Our results of operations depend heavily upon the growing acceptance of the Internet as a commercial marketplace for
financial services
Because the electronic provision of financial services is currently the most significant part of our business, sales of most of our
services and products will depend on consumers continuing to adopt the Internet as a method of doing business and, in particular, as a
method of obtaining financial services. Several factors could adversely affect the acceptance and growth of online commerce. For
example, there can be no assurance that the Internet infrastructure will continue to be able to support the demands placed on it by
growing usage. In addition, the Internet could be adversely affected by the slow development or adoption of standards and protocols to
handle increased Internet activity, or by increased governmental regulation. Moreover, critical Internet issues including security,
reliability, cost, ease of use, accessibility and quality of service remain unresolved, which could negatively affect the growth of
Internet use or commerce on the Internet.
Even if Internet commerce grows generally, the online market for financial services could grow more slowly or even shrink in size.
Adoption of online commerce for financial services by individuals who have relied upon traditional means in the past will require such
individuals to accept new and different methods of conducting business. Our Internet brokerage and banking services involve a new
2002. EDGAR Online, Inc.