Schwab Expects Even More Job Cuts

Charles Schwab Corp., which has reduced its work force by 13% this year, said Friday that more job cuts are probable as trading activity by individual investors continues to wane.

The biggest online brokerage probably will make “additional work force and technology capacity reductions,” according to Schwab’s quarterly filing with the Securities and Exchange Commission.

The San Francisco-based company, whose shares are down 51% this year, took a $117-million pretax charge in the second quarter to pay for cutbacks that included the firing of 3,400 people. For the first time, the 30-year-old company’s earnings have fallen for three consecutive quarters.

More firings are “alarming because it shows they don’t expect a rebound imminently,” said Richard Repetto, an analyst at Putnam Lovell Securities. He cut his estimate Friday for Schwab’s third-quarter profit by 2 cents to 6 cents a share.

A Schwab spokesman, Greg Gable, declined to comment beyond the filing.

Standard & Poor’s changed its outlook on Schwab’s debt to “negative” from “stable,” citing “the tough operating environment and pressure on earnings” at the company.

If Schwab further pares its 22,600-person staff, it may not be alone among financial firms. Merrill Lynch & Co. and other Wall Street companies probably will have to cut more jobs after trimming payrolls by about 5% because of a longer-than-expected slump in investment banking and trading, analysts said.

Firms need to reduce expenses as the industry struggles through its toughest year for profits since 1994, said Henry McVey, an analyst with Morgan Stanley Dean Witter & Co. Schwab’s revenue fell 24% to $1.07 billion in the second quarter.

Schwab’s stock fell 18 cents to $13.83 in New York Stock Exchange trading Friday.