Charles Schwab Corp. reported deepening losses Tuesday, giving the brokerage its first back-to-back quarterly deficits and extending the worst financial funk in its history.
The San Francisco-based company posted a fourth-quarter loss of $79 million, or 6 cents a share, compared with a loss of $13 million, or 1 cent, in the year-ago period.
The 2002 setback included $183 million in charges to pay for 1,800 fourth-quarter layoffs and other cutbacks that management made to adjust for the continuing erosion in Schwab's business.
If not for the accounting charges, Schwab said it would have posted a fourth-quarter profit of $86 million, or 7 cents a share. That was still a penny below the consensus estimate of analysts surveyed by Thomson First Call.
The fourth-quarter loss followed a third-quarter loss of $4 million. After an uninterrupted streak of quarterly profits that lasted nearly 14 years, Schwab has suffered losses in three of the last five quarters.
"This is definitely the most difficult stretch we have ever been through," said Christopher Dodds, chief financial officer.
Schwab's shares dropped $1.26, or nearly 11%, to $10.48 on the New York Stock Exchange.
The company's fourth-quarter performance suffered from the same problem that has been plaguing Schwab since the stock market began its long slide three years ago: Many of its customers continue to avoid equities. Schwab clients made 134,200 trades a day last year, down 9% from 2001, though there was a modest fourth-quarter uptick.
The slide in trading has slashed Schwab's commissions and forced the company to develop additional sources of revenue by offering new investment advisory services and imposing fees on once-free accounts. But the changes haven't been enough to boost Schwab's business overall.
Schwab's fourth-quarter revenue totaled $996 million, a 6% decline from nearly $1.1 billion the previous year.
For all of 2002, Schwab earned $109 million, or 8 cents a share, on revenue of $4.14 billion. In 2001, Schwab earned $199 million, or 14 cents, on revenue of $4.35 billion.