1. E *TRADE Financial Corp.-2004 Presented by: Megan Dow, Kristin Belanger, and Angèle Bourgoin

2. Overview of E*TRADE Presentation Overview of E*TradeOverview of E*Trade History History StocksStocks Stock InformationStock Information Goals and ObjectivesGoals and Objectives The Two DivisionsThe Two Divisions BankingBanking BrokerageBrokerage BCGBCG Their Mission and Vision StatementTheir Mission and Vision Statement New Mission and Vision StatementNew Mission and Vision Statement External Opportunities and ThreatsExternal Opportunities and Threats CPMCPM EFEEFE Internal Strengths and WeaknessesInternal Strengths and Weaknesses IFEIFE AnalysisAnalysis SWOT Matrix SPACE IE Matrix Grand Strategy Matrix Key RatiosKey Ratios Different StrategiesDifferent Strategies QSPM DecisionsDecisions ImplementationImplementation EvaluationEvaluation Update!Update! ReferencesReferences

3. Overview of E*Trade E*Trade Financial Corp. or known as E*Trade Group Inc. (changed name later on) in an online brokerage firm that trades equities, keeps portfolios updated and obtains market information. E*Trade Financial Corp. or known as E*Trade Group Inc. (changed name later on) in an online brokerage firm that trades equities, keeps portfolios updated and obtains market information. E*Trade receives commission from each trade E*Trade receives commission from each trade E*Trade offers 15,200 ATM Machines E*Trade offers 15,200 ATM Machines E*Trade is becoming a complete financial support by offering every service you need in your financial life. E*Trade is becoming a complete financial support by offering every service you need in your financial life. E*Trade is active in 10 other countriesE*Trade is active in 10 other countries Germany Australia Canada New Zealand Denmark Hong Kong Japan Korea Sweden United Kingdom

4. History Founded by Bill Porter, a physicist & inventor in 1982. Founded by Bill Porter, a physicist & inventor in 1982. There was an opportunity to capitalize on potentially discount brokerage so Bill Porter came up with the idea that allows individuals to use their own personal computers to invest, and this would pay less that traditional brokerage fees. There was an opportunity to capitalize on potentially discount brokerage so Bill Porter came up with the idea that allows individuals to use their own personal computers to invest, and this would pay less that traditional brokerage fees. In 1992 the company became E*Trade Securities Inc. and began offering online investing services through AOL and CompuServe. In 1992 the company became E*Trade Securities Inc. and began offering online investing services through AOL and CompuServe. 19961996 There was an increase in E*Trade services by them launching www.etrade.com website. www.etrade.com In August the Company went public (IPO) and had another stock offering 1 year later when Porter handed the company over to Christos Cotsakos. Cotsakos has over 20 years of senior management experience at Federal Express and A.C. Neilson Under new guidance E*Trade became a global leader in online personal financial services with branded web sites around the world.Under new guidance E*Trade became a global leader in online personal financial services with branded web sites around the world.

5. History Continued 20002000 E*Trade bank introduced the first purchase of Telebanc Financial (now E*Trades Financial) an online bank with more than 100,000 deposits.E*Trade bank introduced the first purchase of Telebanc Financial (now E*Trades Financial) an online bank with more than 100,000 deposits. E*Trade bought Card Capture Services (now E*Trade Access) the operator of 9,000 ATM’s across the U.S.E*Trade bought Card Capture Services (now E*Trade Access) the operator of 9,000 ATM’s across the U.S. E*Trade acquired Canadian firm VERSUS Technologies; a provider of electronic trading services.E*Trade acquired Canadian firm VERSUS Technologies; a provider of electronic trading services. The International Capital announced plans to offer IPO to European InvestorsThe International Capital announced plans to offer IPO to European Investors 20012001 E*Trade entered consumer leading business when acquired online mortgage originator Loans Direct (now E*Trade Mortgage). E*Trade Mortgage had 3,400 employees at the end of 2003 which was only down 5 employees from 2003 20032003 revenues increased to $2008 Million and net income increased to $203 Million.

7. Info about ET Traded on NYSE under symbol ETTraded on NYSE under symbol ET Before 2/15/01 traded on Nasdaq under EGRPBefore 2/15/01 traded on Nasdaq under EGRP The option symbol is ET plus 2 letters indicating month & strike price.The option symbol is ET plus 2 letters indicating month & strike price. The first IPO 8/96 net proceeds 46.4 millionThe first IPO 8/96 net proceeds 46.4 million The secondary IPO 8/97 net proceeds 188.8 million.The secondary IPO 8/97 net proceeds 188.8 million.

8. Goals and Objectives GoalsGoals To provide financial solutions to retail and institutional customers globally.To provide financial solutions to retail and institutional customers globally. “In the Internet economy, the only competitive advantage is speed. We’ve got to move quickly and powerfully with one another to achieve our goals. We must operate in a global context always ready to adapt to emerging opportunities. We thrive on chaos. We feel empowered to act quickly and adjust as often as needed. And if we fail, we learn from it and restart in the direction of our goals. We are risk-takers.”“In the Internet economy, the only competitive advantage is speed. We’ve got to move quickly and powerfully with one another to achieve our goals. We must operate in a global context always ready to adapt to emerging opportunities. We thrive on chaos. We feel empowered to act quickly and adjust as often as needed. And if we fail, we learn from it and restart in the direction of our goals. We are risk-takers.” ObjectivesObjectives Offers retail investing, trading products, services with automated order placement and limit equity, futures, options, exchange-traded funds, bond orders; real-time streaming quotes, commentary, and news; advanced trading platforms, for traders, personalized portfolio tracking and access to more than 7,000 mutual funds.Offers retail investing, trading products, services with automated order placement and limit equity, futures, options, exchange-traded funds, bond orders; real-time streaming quotes, commentary, and news; advanced trading platforms, for traders, personalized portfolio tracking and access to more than 7,000 mutual funds.

9. Divisions of ET Banking Banking Includes the E*Trade BankIncludes the E*Trade Bank Access to 15,200 ATM’sAccess to 15,200 ATM’s VERSUS TechnologyVERSUS Technology TIR Holding LimitedTIR Holding Limited The service center for institutional investors, comprises the Global & Institutional segment The service center for institutional investors, comprises the Global & Institutional segment Brokerage Brokerage Cash accounts or also called a margin account, with or without the options trading feature. Has E*Trade Securities and E*Trade Clearing as protection agencies within the division

10. BCG Due to unforeseen circumstances the financials for both Banking and Brokerage divisions do not exist. The revenue for both divisions is combined into one. Without the required information we were unable to actually do a BCG. Thank you for your understanding. Due to unforeseen circumstances the financials for both Banking and Brokerage divisions do not exist. The revenue for both divisions is combined into one. Without the required information we were unable to actually do a BCG. Thank you for your understanding.

11. Their Mission Statement Using technology to set the standard for innovation, service, and value for investors seeking more control over their investments. E*TRADE’s rich suite of products and services can be customized to reflect a customer’s unique needs and interests, including portfolio tracking, free real-time quotes, market news, and research available 24 hours a day, seven day a week. Customers can assess their E*TRADE accounts virtually any time anywhere around the world. Using technology to set the standard for innovation, service, and value for investors seeking more control over their investments. E*TRADE’s rich suite of products and services can be customized to reflect a customer’s unique needs and interests, including portfolio tracking, free real-time quotes, market news, and research available 24 hours a day, seven day a week. Customers can assess their E*TRADE accounts virtually any time anywhere around the world.

12. Their Vision Statement E*TRADE’s vision is “to empower self- directed investors to make informed investment decisions and take control of their financial future with anytime, anywhere access to the world’s major investment markets.” E*TRADE’s vision is “to empower self- directed investors to make informed investment decisions and take control of their financial future with anytime, anywhere access to the world’s major investment markets.”

13. New Mission Statement E*TRADE provides is an online brokerage firm for anyone and everyone concerned with their financial freedom, it allows you to trade equities, create a portfolio, get market information any day at anytime around the world, and much more. With our technology to set the standard to be innovative, service and control over the investors investment, this will help us grow as a company in becoming a complete financial support business offering every service you need in your financial life, while making our customers, stockholders and employees happy. We help the communities through non-profit partnership, volunteer work, and increase financial literacy in the neighborhoods. In becoming more profitable, we set ourselves apart from tradition brokerage firms, we have huge discount brokerage fees to help customers be more affordable. E*TRADE provides is an online brokerage firm for anyone and everyone concerned with their financial freedom, it allows you to trade equities, create a portfolio, get market information any day at anytime around the world, and much more. With our technology to set the standard to be innovative, service and control over the investors investment, this will help us grow as a company in becoming a complete financial support business offering every service you need in your financial life, while making our customers, stockholders and employees happy. We help the communities through non-profit partnership, volunteer work, and increase financial literacy in the neighborhoods. In becoming more profitable, we set ourselves apart from tradition brokerage firms, we have huge discount brokerage fees to help customers be more affordable.

14. New Vision Statement To become the a leading and complete financial support and execution portal for individuals, by diversifying and offering every service you need in your financial life, with access to your accounts anytime, anywhere in the whole world. To become the a leading and complete financial support and execution portal for individuals, by diversifying and offering every service you need in your financial life, with access to your accounts anytime, anywhere in the whole world.

15. Key External Factors Opportunities Opportunities Commission revenues increased, declining volatile stock prices Commission revenues increased, declining volatile stock prices Business’s turn to E*TRADE because of other unethical business’s, gaining customers Business’s turn to E*TRADE because of other unethical business’s, gaining customers Stock markets have remained turbulent Stock markets have remained turbulent Excited market overseas, slightly better Excited market overseas, slightly better Expanded into new business’s Expanded into new business’s 2 nd largest market share in the industry 2 nd largest market share in the industry Threats Threats U.S economy may fall back into recession U.S economy may fall back into recession Lowered interest rates Lowered interest rates Geopolitical fears Geopolitical fears Numerous corporate scandals, investor confidence Numerous corporate scandals, investor confidence Aggregate pretax profits, fell 33% Aggregate pretax profits, fell 33% Investment Services Industry fell 24% Investment Services Industry fell 24% Market for electronic financial services are growing rapidly, more competitors Market for electronic financial services are growing rapidly, more competitors

16. EFE KEY EXTERNAL FACTORSWEIGHTRATING WEIGHTED SCORE Opportunities 1. Commission Revenues Increase0.1040.40 2. Gaining Customers because other unethical business's0.1030.3 3. Stock markets remained turbulent0.0520.10 4. Excited market overseas0.1020.20 5. Expanded into different business's0.1040.40 6. 2nd largest market in the industry0.1040.40 Threats 1. U.S may fall back into a recession0.1030.30 2. Lowered interest rates0.0520.10 3. Geopolitical fears0.051 4. Numerous corporate scandals, investor confidence0.1020.20 5. Aggregate pretax profits, fell 33%0.0530.15 6. Investment Industry fell 24%0.0530.15 7. Market is growing rapidly, more competitors0.0520.1 TOTAL1.002.85

17. CPM E*TRADESchwabAmeritrade Critical Success factors Weights 0.0 to 1.0 Ratin g 1 to 4 Weighted Score Rating 1 to 4 Weighted Score Rating 1 to 4 Weighted Score Market Share0.1730.5140.6820.34 Financial Position0.1730.5140.6820.34 Customer Loyalty0.1530.453 20.30 Global expansion0.1540.6030.453 Organizational structure0.1320.2630.393 Customer service0.1530.4540.6030.45 Management experience0.1330.393 20.26 Advertising0.1230.3620.2430.36 TOTAL1.03.023.202.55

18. Key Internal Factors Strengths Strengths Rich suite of products financial services on the internet Rich suite of products financial services on the internet Access to accounts 24/7, 7 days a week Access to accounts 24/7, 7 days a week Discount on brokerage fees Discount on brokerage fees Located and have access throughout the world Located and have access throughout the world ATM’s located around the world ATM’s located around the world You can do your financial services yourself in your home You can do your financial services yourself in your home Incurred $227 million to restructure its operations Incurred $227 million to restructure its operations Weaknesses Weaknesses Does not have as many services as a traditional brokerage firm Does not have as many services as a traditional brokerage firm Distribution of money, expenditures Distribution of money, expenditures Revenue is falling Revenue is falling Regaining the investors confidence back Regaining the investors confidence back

19. IFE KEY INTERNAL FACTORSWEIGHTRATING WEIGHTED SCORE Internal Strengths 1. Rich suite of products0.0530.15 2. Access to accounts 24/7, any day0.1040.20 3. Discount on brokerage fees0.1540.60 4. Located and have access through the world0.1040.40 6. ATM's located around the world0.1040.40 7. You can do your financial service in your home0.0530.15 8. Incurred $227 million to restructure its operations0.1540.60 Internal Weaknesses 1. Does not have many services like traditional firms0.0520.10 2. Distribution of money, expenditures0.151 3. Revenue is falling0.051 4. Regaining the investors confidence back0.0520.10 TOTAL1.02.90

20. SWOT

21. SPACE

22. IE Matrix

23. Grand Strategy Matrix

24. Key Ratios Rev: 1.63B Rev: 1.63B Market cap: 11.24 B Market cap: 11.24 B Return on assets: 1.18% Return on assets: 1.18% Return on equity: 15.86% Return on equity: 15.86% REV. per share: 4.388 REV. per share: 4.388 Total Debt: 17.39 B Total Debt: 17.39 B Total debt to equity: 5.114 Total debt to equity: 5.114 Operating Cash: 568.77M Operating Cash: 568.77M

25. Different Strategies Acquire other firms in order to diversify the services offered to clients Acquire other firms in order to diversify the services offered to clients To restructure the internal organization of E*Trade in order to compete with competitors To restructure the internal organization of E*Trade in order to compete with competitors

26. QSPM

27. Decisions Restructurization of the internal aspect of E*Trade Restructurization of the internal aspect of E*Trade QSPM numbers signify thisQSPM numbers signify this

28. Implementation Distribute the money throughout the company Distribute the money throughout the company Include everyone involved with E*trade to put suggestions where the company needs to be reformed Include everyone involved with E*trade to put suggestions where the company needs to be reformed Short term Short term Long term Long term

29. Evaluation Re-evaluating the strategic plan Re-evaluating the strategic plan Financials for money flow Financials for money flow Quarterly reports Quarterly reports Competitors Competitors Work on any suggestions that continue to appear Work on any suggestions that continue to appear

30. Update! As of this year E*Trade is 5 th in the Top Investment Brokerage Firms As of this year E*Trade is 5 th in the Top Investment Brokerage Firms

31. References http://www.etrade.com http://www.etrade.com http://www.etrade.com http://finance.yahoo.com http://finance.yahoo.com http://finance.yahoo.com Strategic Management Concepts and Cases Strategic Management Concepts and Cases