E*Trade Financial Corporation | Overcoming Hardships in the New Century
Overcoming Hardships in the New Century
By this time, however, the dot-com frenzy of the late 1990s was starting to show signs of deterioration. In fact, in just one short year, E*Trade saw its revenues drop and profits plummet, with the company posting a loss of $241.5 million in 2001. By 2002, the company's stock was trading at $8 per share, down from nearly $63. To make matters worse, E*Trade and its formidable leader Cotsakos took center stage in a public relations disaster in April 2002 when the company disclosed that its CEO had been paid $77 million in 2001. In an attempt to appease angry shareholders who believe he had been paid an exorbitant amount, Cotsakos returned $21 million to E*Trade and signed a renegotiated contract that eliminated a base salary in favor of a bonus structure based on performance.
Despite the challenging business environment, E*Trade forged ahead with its expansion and diversification plans. To lure new customers, the company opened small financial zones in 26 Target stores and larger financial centers in New York, Boston, Denver, San Francisco, and Los Angeles. The firm also branched out into automated teller services, staking its claim on the third-largest ATM network in the United States. In June 2002, the company acquired Tradescape Corporation in a move that nearly doubled the number of its brokerage transactions.
Cotsakos resigned in January 2003, leaving Caplan to take the helm. That same year, the company adopted E*Trade Financial Corporation as its new corporate moniker, a sure sign that the company's strategy of focusing on brokerage, banking, and lending was alive and well. While the company continued to battle a weak economy, it appeared to have weathered the dotcom fallout better than most and seemed to be on track for future growth. In a 2003 Money magazine interview, Caplan was asked if people recognized that E*Trade was more than just a broker. He responded, "That's one of the things I'm going to work on. I'll be happy the day I die if people refer to us as a diversified financial services company."