eTrade 2009 Annual Report Download - page 28

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 core business is our trading and investing customer franchise. Our strategy is to profitably grow this
business by focusing on two primary groups of customers: traders and long-term investors. We believe our
trading customers, particularly our active traders, are the foundation of our brokerage business and we are
focused on maintaining our competitive position with this customer group. Our long-term investing customer
group is less developed when compared to our trading customers and represents our largest opportunity for future
growth.
We believe our focus on certain key factors will enable us to execute our strategy of profitably growing our
trading and investing business. These key factors include the development of innovative online trading and long-
term investing products and services, a concerted effort to deliver superior customer service, creative and cost-
effective marketing and sales, and expense discipline. In addition, we continue to invest significantly for long-
term growth so that we remain competitive among the largest online brokers.
In addition to focusing on our customer franchise, our strategy includes an intense focus on addressing the
balance sheet issues primarily caused by the mortgage crisis. We are focused on improving our capital structure
as well as mitigating the credit losses inherent in our loan portfolio. We believe the recapitalization transactions
executed in the second and third quarters of 2009 significantly improved our capital structure and better
positioned the Company for future growth.
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 under
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 trading customers;
• our ability to generate meaningful growth in the long-term investing customer group;
• our ability to assess and manage credit risk;
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