Schwab Posts Loss in Wake of Cuts

Slumping brokerage Charles Schwab Corp. said Friday that it suffered a third-quarter loss of $41 million, reflecting the costs of an expansion gone awry.

The loss of 3 cents a share represents yet another setback for the San Francisco-based company, which has been in a financial funk for nearly four years. The results for the three months ended in September contrasted with a profit of $127 million, or 9 cents a share, at the same time last year.

Revenue for the period totaled $1 billion compared with $997 million last year.

Schwab attributed the poor quarter to a $70-million charge to account for a recent spate of cutbacks as well as $87 million in losses from its capital markets division, which the company is selling at a discounted price.

If not for those items, Schwab said it would have earned 8 cents a share. That figure matched the mean estimate among analysts surveyed by Thomson First Call.

Investors apparently were braced for worse. Schwab’s shares rose 50 cents to $8.97 on the New York Stock Exchange.

The quarter was the first for which the brokerage reported results since founder Charles Schwab returned as chief executive. The company’s board in July demanded the resignation of Schwab’s longtime colleague David Pottruck after concluding he had been leading the brokerage in the wrong direction.

Since taking back the reins, Schwab has moved aggressively to repair some of the problems. The company has closed branches, trimmed its work force, cut prices and agreed to sell the capital markets division to Swiss banking giant UBS for $265 million.