siliconinvestor.com
Schwab Profits Don't Calm Investors
SAN FRANCISCO, Oct 17, 2000 (AP Online via COMTEX) -- Charles Schwab's third-quarter profits met expectations as new business continued to pour in, but the discount brokerage still got caught up in the stock market's recent downdraft.
The San Francisco-based company earned $142 million, or 10 cents per share, in the period, a 1 percent dip from $144 million at the same time last year. Analysts surveyed by First Call/Thomson forecast earnings of 12 cents per share.
Excluding one-time charges from recent company acquisitions, Schwab hit Wall Street's earnings target. The company's profit would have totaled $166 million, or 12 cents per share, without special items related to the purchase of U.S. Trust Corp. and CyBerCorp.
Third-quarter revenues were $1.32 billion, a 30 percent improvement over last year's figure of $1.02 billion.
Already skittish about how the stock market's recent slide might affect brokerages, investors didn't react well to Schwab's results. Schwab's shares closed Tuesday down 88 cents, or nearly 3 percent, to $30.63.
"Schwab did about as well as it could in the current market environment, but investors are worried about how the company's business is going to be affected in the months ahead," said analyst Gregory Smith of Chase H&Q in San Francisco. "Long term, the outlook for Schwab looks bright. In the short term, it looks ugly."
Although trading activity slowed down in the quarter, virtually all aspects of Schwab's business continued to surge in the three months ended Sept. 30. The brokerage added 281,000 new customer accounts, raising its number of active customers to 7.4 million as of Sept. 30.
Schwab picked up $41 billion in new assets, helping to push its total customer assets to $961 billion, a 38 percent increase from the prior year.
Internet trading activity continued to propel Schwab - widely regarded as a prototype for melding traditional business channels with online avenues.
Online stock trades accounted for 82 percent of Schwab's third-quarter volume, up from 67 percent at the same time last year. More than half of Schwab's customers - 4.2 million as of Sept. 30 - have online accounts.
Although they trade more frequently than traditional customers, the online customers tend to have less money in their accounts. As of Sept. 30, the online customers held $420 billion in assets, or about 44 percent of Schwab's total.
Through the first nine months of the year, Schwab earned $579 million, or 41 cents per share, a 22 percent improvement from last year, when the company earned $476 million, or 35 cents per share.
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