Schwab Posts Net Loss of $13 Million

Leading online stock broker Charles Schwab & Co. on Tuesday reported its first quarterly loss in 14 years, but said its business is picking up again after plummeting with Wall Street’s bear market in 2001.

The San Francisco-based company reported a fourth-quarter net loss of $13 million, or 1 cent a share, contrasted with a profit of $139 million, or 10 cents a share, a year earlier.

Schwab hadn’t incurred a quarterly loss since the final three months of 1987--a period that included a market crash.

If not for one-time charges to pay for layoffs and other cost-cutting moves in the fourth quarter, Schwab said it would have earned $109 million, or 8 cents a share. That still would have been a 33% decline from the prior year’s operating profit of $162 million, or 11 cents a share.

The recent quarter’s results matched the consensus estimate of analysts polled by Thomson Financial/First Call. Schwab shares eased 1 cent to $16.01 on the New York Stock Exchange. The stock has rebounded from a low of $8.94 in September, but is far off its 2000 peak of $43.

The brokerage firm’s fourth-quarter revenue totaled $1.06 billion, a 21% decline from $1.34 billion a year earlier.

For all of 2001, Schwab earned $199 million, or 14 cents a share, a 72% drop from net income of $718 million, or 51 cents a share, in 2000. Operating revenue in 2001 plummeted 25% to $4.33 billion.

Despite the fourth-quarter loss, Schwab executives said they saw encouraging signs in business at the end of the year.

With customer trading activity picking up from the third quarter, Schwab expects to rebound in 2002, said Christopher Dodds, the company’s chief financial officer.

“With every day that goes by, we are increasingly optimistic that the worst is behind us,” he said. “We are not planning on reporting another quarterly loss for another 14 or 15 years.”

The company’s loss during the final three months of 2001 stemmed from the final phase of an overhaul that shed 6,700 jobs, or 25% of the firm’s work force.

No further firings are expected unless business deteriorates even more, Dodds said.

This year, Schwab plans to build on its discount brokerage business by offering more fee-generating investment advice and other services aimed at more-affluent customers.

But experts say the field of advice-givers has expanded significantly in recent years, so Schwab faces tough competition.

*

Associated Press was used in compiling this report.