Schwab, Ameritrade Post Profits in Third Quarter

Online brokerages Charles Schwab Corp. and Ameritrade Holdings Corp. on Tuesday reported quarterly profits compared with year-earlier losses, as Wall Street’s rally brought small investors back to stocks.

Schwab, the largest discount broker by assets, had net income of $127 million, or 9 cents a share, compared with a loss of $4 million in the third quarter of 2002.

But the San Francisco-based firm disappointed some analysts by reporting a decline in new-account openings.

Omaha-based Ameritrade, the biggest online broker by volume, earned a record $55 million, or 13 cents a share. It had lost $46 million a year earlier.

Revenue in the quarter was $1.05 billion at Schwab, up 3% from a year earlier. Ameritrade’s revenue rose 69% to $197 million.

Schwab clients averaged 145,100 trades a day, up 12% from the year-earlier quarter. Ameritrade customers made an average 158,000 trades a day, a total lifted by the firm’s merger with rival Datek a year ago.

Schwab has been trying to emphasize money management and other services that generate continuing fees. But the firm’s new-account openings totaled 124,000 in the quarter, down 23% from the same period in 2002.

“We certainly were somewhat disappointed” in the account totals, said Christopher Dodds, Schwab’s chief financial officer.

“Schwab still has a lot of work to do to become more of a full-service firm,” said Erick Maronak, research chief at money manager Victory Newbridge.

Ameritrade raised its earnings estimate for the fiscal year that began Oct. 1 to a range of 31 cents to 57 cents a share, from a range of 27 cents to 53 cents.

“If you believe this is the beginning of an economic recovery, you’re going to continue to see the retail investor get more involved,” said Joe Moglia, Ameritrade’s chief executive.

Ameritrade shares rose 18 cents to $14.17 on Nasdaq.

From Bloomberg News and Reuters