Schwab Likely to Miss Earnings Expectations

Charles Schwab Corp. said earnings will probably miss analysts’ expectations because of the stock market plunge. The No. 1 discount broker might announce job cuts this month as trading by clients fell to its lowest level since August. After losing 48% in the last year, Schwab’s market value has fallen to $23 billion, about half that of Merrill Lynch & Co., the biggest U.S. brokerage by assets. Schwab and Merrill’s market values were even at the beginning of 2000. Schwab shares rose 86 cents to close at $17.90 on the NYSE. Schwab clients lost a combined $83.4 billion in February--about $11,000 each--as stock markets sank. The clients made an average 189,000 commission trades a day last month, down 13% from January and a third less than the same month a year ago. Schwab said it might further reduce revenue and expense expectations for the rest of the year. Schwab Chief Financial Officer Christopher Dodds said the firm is extending what had been temporary cuts in executives’ compensation until “further notice.” The same holds true for the pay of co-Chief Executives Charles Schwab and David Pottruck, who halved their own salaries. The San Francisco-based firm expects to decide on and announce layoffs by the end of the month. It has tried to avoid firing employees by cutting executives’ salaries, encouraging workers to take unpaid time off and reducing other expenses.