Investing and Trading E*Trade’s Problems Porters Model Recent News Future Suggestions

History Corporate

Governance SWOT Analysis Competitors Why Choose E*Trade

Conclusion

1980: William A Porter joined with Bernard Newcomb to create TradePlus.

In 1982, TradePlus contracted with C.D. Andersen & Company to put the system online.

July 11, 1983 the first official trade was made by a dentist in Michigan

1984: C.D. Andersen counted about 500 customers that traded on TradePlus.

By 1987 TradePlus was using all its servers at all periods of the day 24/7. Including international customers.

October 1987: The Stock Market Crashed which left online trading services suffering.

1991: Porter establishes E*Trade Securities Inc. 1994: With revenues of nearly $11 million,

TradePlus and E*Trade operate as the fastest-growing private company in the United States.

1996: Christos Cotsakos is named president and CEO; E*Trade goes public.

1999: Revenue increases by 134.2 percent.

2001 the company was facing losses of $241 million.

2002 the stock price was down from $63 to $8.

After a public relations disaster in 2002, Cotsakos resigned as CEO in January 2003.

That same year E*Trade Group was redesigned as E*Trade Financial Corporation.

E*Trade dedicates to the company's strategy of focusing on brokerage, banking, and lending.

‣Chairman and CEO: Donald LaytonChairman of the Board: November 2007Chief Executive Officer: March 2008

‣President & COO: R. Jarrett Lilien With the company since 1999Appointed President & Chief Operating Officer: 2003Director: November 2006Served as Acting CEO: Dec 2007 - Feb 2008

‣CFO: Robert SimmonsCorporate Treasurer: 2001Chief Financial Officer: January 2004

Chair of Nominating and Corporate Governance Committee: Donna Weaver- Director since April 2003

Chair of the Compensation Committee: Cathleen Raffaeli- Director since April 2003

Chair of the Audit Committee: Michael Parks- Director since April 2003

Board of Directors

Strong operating record Recognizable Name Brand Great Advertising Techniques Easily Navigable website User Friendly Customer Support ex. Show link 24 hour trading

Customers defaulting on loans Takes five days for money to transfer Decline in operating income and core

business Decline in loan quality No face to face help Difficult to predict future No spending on research development

New Industry plenty of room for growth Great Name for Internet company Great New Advertising Campaign may bring

in new customers Online services allows customer

convenience of their own homes International Trading Possible Future Mergers

Similar Companies in the Industry Same Technologies Competitors have greater market caps Greater financial position allows for more

spending on advertising Poor economic condition Ever changing internet technology Hacking of important Information

Ameritrade Holding Corp. merged with TD Waterhouse Group The Charles Schwab Corp. A.G. Edwards Citigroup Global Markets FirstFed Financial Corp. Fidelity Investments Scottrade Inc.

http://finance.yahoo.com/q?s=AMTD http://www.tdameritrade.com/welcome1.html

Founded in 1971 Provides securities brokerage services and

technology-based financial services 10.00 Billion Dollar Market Cap Charges $9.99 Per Trade 4,402 Employees

http://finance.yahoo.com/q?s=SCHW http://www.schwab.com Founded in 1971 Provides securities brokerage, banking, and related

financial services to individual and institutional investors.

Operates in the United States, the United Kingdom, and Hong Kong.

Merged with TD Waterhouse Market Cap 22.64 Billion 13,300 employees Was able to dodge most faulty mortgages due to

customer confidence

SCHW = Charles Schwab Corp.

Pvt1 = FMR Corp. (privately held)

AMTD = TD AMERITRADE Holding Corporation

Industry = Investment Brokerage - National

1 = As of 2006  

ETFC SCHW Pvt1 AMTD Industry

Market Cap: 1.98B 22.96B N/A 10.87B 1.27B

Employ ees: 3,757 13,300 41,9001 4,202 2.25K

Qtrly Rev Growth (yoy): -63.70% 22.70% N/A 22.20% 15.30%

Revenue (ttm): 1.90B 4.99B 12.87B1 2.17B 1.37B

Gross Margin (ttm): 84.94% 100.00% N/A 96.68% 89.58%

EBITDA (ttm): N/A N/A N/A N/A 630.86M

Oper Margins (ttm): 29.74% 40.47% N/A 55.91% 25.71%

Net Income (ttm): -1.44B 1.12B N/A 741.11M 40.05M

EPS (ttm): -3.397 1.970 N/A 1.223 0.78

Easy online money transfer ex.Quicktransfer

Simple quote searches Company Information/ Summaries Alert settings ex. Smart Alerts Online bill payment Easy account management Online Service center

www.etrade.com

Strength◦ 4.3 million accounts in 40+ countries worldwide.◦ $176 billion in customers assets.◦ Among the highest level of security in the

industry.

Stability◦ A pioneer in online financial services.◦ Included in the S&P 500 index since 2004.◦ Publicly traded since 1996.

Value◦ Low commissions and 7000+ mutual funds.◦ High yields on CDs and money market accounts.◦ Low rates on mortgages, home equity, and

margin loans.

Ease◦ Tools and research to optimize investing, banking

and borrowing.◦ Three levels of investment advice and guidance.◦ Integrated access to all E*Trade accounts.

Service◦ Access to knowledgeable customer services reps

seven days a week.◦ Three levels of investment advice.◦ Specialized teams for active, options and future

traders.

Digital Security ID- makes unauthorized login virtually impossible.

Electronic Documents-Curb the identity theft by receiving statements online instead of by mail.

Anti-Virus & Firewall Software-Protect from hackers.

Smart Alerts-Get customized account activity on every transaction by e-mail, PDA, or mobile phone instantly.

Stocks◦ Free streaming real-time stock quotes.◦ Free independent research from six independent

sources.◦ Advanced charting and stock screeners.◦ Access to apply for IPOs◦ Online global stock trading

Options◦ Free education from basic strategies to advanced

techniques. Trading Seminars Investing Seminars Audio and Video Podcasts including E*Trades own

Market Outlook. https://us.etrade.com/e/t/jumppage/viewjumppage?PageName=etrade_market_outlook_2008

Global Trading◦ Diversify in 6 global markets and five local

currencies including Canada, France, Germany, Hong Kong, Japan, and the U.K.

◦ Global Watch lists◦ Advanced Global Stock Charting◦ Real-time international quotes

Bonds◦ Corporate◦ Municipal◦ Government agencies

Account Management◦ Customizable, complete view of holdings.◦ In-depth portfolio views and real time balances.◦ Free electronic quick transfers.◦ Electronic delivery of statements.◦ Transaction history, gains/losses, and tax records.

*Merger between TD

Waterhouse and Ameritrade

*Ever Changing Internet

Technology* Future Mergers

TD AmeritradeCharles Schwab

FidelityScottradeCitigroup

A.G. EdwardsFirstfed

*Storefront banks

*Independent Brokers

*Brokerage Firms

*Other Lending Institutions

•New Customers Daily

•Internet Trends•*# of online banks

•*#Number of active online

traders

*Citadel

*Limited by Available Funding

*Percentage Rates

*Economy

In November of 2007, public concerns about the bank’s holdings of asset-backed securities led to widespread concerns about E*Trade viability.

At this point through December 2007 customers withdrew approximately $5.6 billion of net cash and $12.2 billion of net assets from E*Trades bank and brokerage business.

Many of these accounts were active customers with large cash and securities balances.

For the year ending December 31, 2007 E*Trade incurred a net loss of $1.4 billion, or $3.40 per share due primarily to losses in the home equity loan and asset-backed securities portfolio.

With the ongoing credit crisis in residential real estate still going on E*Trade expects to lose another $1.5 billion in the next 3 years.

Still a large amount of projected debt from the home and equity loans connected with the Citadel transaction.

Following the Citadel investment E*Trade’s long-term debt is $3 billion.

Facing five class action lawsuits and four derivative lawsuits, alleging disclosure violations regarding their home equity, mortgage and securities portfolios.

The SEC has also initiated an informal inquiry into matters related to E*Trade’s loan and securities portfolios.

E*Trade reported a net loss of $15.8 million, compared to profits of $5.9 million for the like quarter a year ago

33 cent per share loss compared to 15 cent profit per share one year prior.

Charles Schwab's 1st-quarter profit up 12 percent as brokerage gets off to best start in its history

E*Trade takes hedge fund from Citadel Stock price has reached an all time low

Could face difficulties coming back from net losses

May merge with other active trading companies

Company could experience bankruptcy Better investigate customer loan history Possible rate cuts could revamp market

Follow E*Trade’s progress in the future!

Thank you for putting up with us today!

WE HOPED YOU LEARNED SOMETHING and have taken something away from this TODAY!!

https://investor.etrade.com/governance.cfm>. https://investor.etrade.com/releasedetail.cfm?ReleaseID=297057>. http://en.wikipedia.org/wiki/E%2ATrade>. E*TRADE Company Overview: 14 Apr. 2008 http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?

FilingID=5764657-904-728378&type=sect&dcn=0001193125-08-041906

http://biz.yahoo.com/ap/080415/e_trade_earnings_preview.html?.v=1

http://biz.yahoo.com/ap/080415/earns_charles_schwab.html?.v=12 http://www.news.com/ETrades-loss-meets-expectations/2100-

1001_3-216690.html.   http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?

FilingID=5764657-904-728378&type=sect&dcn=0001193125-08-041906

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