Schwab to Cut 10% of Staff as Trading Drops

Charles Schwab Corp. said Tuesday that it would cut about 10% of its staff, or about 1,880 employees, to cope with weak client trading volume.

The discount brokerage also said it might miss its third-quarter earnings forecast.

San Francisco-based Schwab said the number of trades it handles daily fell 25% in August from the previous month to an average 117,500, the biggest drop since May 2000.

The trading activity--which excludes mutual fund trades--fell even further in the first nine days of September, to an average 100,000 daily.

Chief Financial Officer Christopher Dodds said the company expects to earn 7 to 8 cents a share for the third quarter, compared with an earlier forecast of 8 cents.

Analysts on average were expecting 8 cents, within a range of 7 to 9 cents, according to Thomson First Call.

Schwab shares fell 60 cents, or 6%, to $9.17 in New York Stock Exchange trading, down from a 52-week high of $19 in January.

Schwab fired about 7,200 employees, or 25% of its staff, in a restructuring last year.

The end of the bull market in 2000 meant the company was too big for the declining customer activity.

More recently, Schwab cut 350 jobs in August when it closed a call center in Austin, Texas, ending the month with 18,800 employees.

It plans to cut about 10% of that remaining staff by the end of October, Dodds said.

Schwab said its recent cost-cutting moves, including the latest round of job cuts, would save more than $225 million a year.

Schwab continues to bring in new money, despite the glum environment. It brought in $4.4 billion in net new assets in August, ending the month with $767.6 billion in total client assets.

That was down 7% from a year earlier as stock market declines cut into portfolio values.