eTrade 2010 Annual Report Download - page 31

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. Building on the strengths of this
franchise, our growth strategy is focused on four areas: retail brokerage, corporate services and market making,
wealth management, and banking.
• Our retail brokerage business is our foundation. We believe a focus on these key factors will position
us for future growth in this business: growing our sales force with a focus on long-term investing,
optimizing our marketing spend, continuing to develop innovative products and services and
minimizing account attrition.
• Our corporate services and market making businesses enhance our strategy by allowing us to realize
additional economic benefit from our retail brokerage business. Our corporate services business is a
leading provider of software and services for managing equity compensation plans and is an important
source of new retail brokerage accounts. Our market making business allows us to increase the
economic benefit on the order flow from the retail brokerage business as well as generate additional
revenues through external order flow.
• We also plan to expand our wealth management offerings. Our vision is to provide wealth management
services that are enabled by innovative technology and supported by guidance from professionals when
needed.
• Our retail brokerage business generates a significant amount of customer cash and we plan to continue
to utilize our bank to optimize the value of these customer deposits.
Our strategy also includes an intense focus on mitigating the credit losses in our legacy loan portfolio and
maintaining disciplined expense management. We remain focused on strengthening our overall capital structure
and positioning 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;
• weakness or strength of the residential real estate and credit markets;
• 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;
• market demand and liquidity in the wholesale borrowings market, including securities sold under
agreements to repurchase;
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