eTrade 2008 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 is to profitably grow our retail customer franchise and mitigate the risks associated with our
balance sheet. We plan to grow our retail customer franchise by offering online brokerage and related products
and services, including investor-focused banking and asset gathering products and services. We believe we can
accomplish this growth by appealing to retail investors, especially customers of traditional brokerages, who are
attracted to our low-cost, easy to use and innovative capabilities.
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.
We are also focused on simplifying and streamlining the business by exiting and/or restructuring certain
non-core operations. We believe these changes will better align our business with the 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;
• the performance, volume and volatility of the equity and capital markets;
• customer perception of the financial strength of our franchise;
• market demand and liquidity in the secondary market for mortgage loans and securities; and
• market demand and liquidity in the wholesale borrowings market, including securities sold and
agreements to repurchase.
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;
• our ability to assess and manage interest rate risk; and
• disciplined expense control and improved operational efficiency.
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