eTrade 2007 Annual Report Download - page 25

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and the
related notes that appear elsewhere in this document.
GLOSSARY OF TERMS
In analyzing and discussing our business, we utilize certain metrics, ratios and other terms that are defined
in the Glossary of Terms, which is located at the end of Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
OVERVIEW
Strategy
Our strategy centers on growing our global customer base and mitigating the risks associated with our
balance sheet. We plan to grow our global customer base by appealing to retail investors, specifically those who
are customers of large established financial institutions, by providing them with innovative, easy, low-cost
financial solutions and service. Our financial solutions include a suite of trading, investing, banking and lending
products.
Our plan to mitigate the risks associated with our balance sheet contains three core goals: reduce credit risk
in our loan portfolio, reduce our level of corporate debt and reduce operating expenses. We believe that the
successful completion of this plan will significantly improve our financial strength and will help restore customer
and investor confidence in our franchise.
We are also focused on simplifying and streamlining the business by exiting and/or restructuring certain
non-core operations, primarily in our lending and institutional businesses. We believe these changes will better
align our business with the global retail investor.
Key Factors Affecting Financial Performance
Our financial performance is affected by a number of factors outside of our control, including:
• customer demand for financial products and services;
• the weakness or strength of the residential real estate and credit markets;
• customer perception of the financial strength of our franchise;
• market demand and liquidity in the secondary market for mortgage loans and securities;
• interest rates and the shape of the interest rate yield curve; and
• the performance, volume and volatility of the equity and capital markets.
In addition to the items noted above, our success in the future will depend upon, among other things:
• continuing our success in the acquisition, growth and retention of customers;
• deepening customer acceptance of our products and services;
• our ability to assess and manage credit risk; and
• disciplined expense control and improved operational efficiency.
22