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Non-Tech : E*Trade (NYSE:ET) -- Ignore unavailable to you. Want to Upgrade?

To: Esway who wrote (9826)	12/10/1999 12:17:00 AM
From: Spytrdr	Respond to of 13953

Schwab's Founder Says Merrill Lynch's Web Efforts Won't Work 12/9/99 5:31:00 PM Source: Bloomberg News cnetinvestor.com San Francisco, Dec. 9 (Bloomberg) -- Chuck Schwab says Merrill Lynch & Co.'s Internet brokerage plans won't work. Merrill must balance the interests of its 14,800 brokers, compensated largely through commissions, against some clients' desire to make trades themselves at discount prices. Last week, Merrill began charging as little as $29.95 per transaction, a fraction of the cost of going through a broker. ``You've got your distribution group out there that's getting completely undermined in their compensation, and we haven't yet seen the final grumblings of their distribution system,' said Schwab, speaking from his San Francisco office. ``It's going to be a pretty negative outcome.' Schwab isn't taking any chances. Today he unveiled Charles Schwab Corp.'s plan to step up training seminars to convince the 56 percent of its clients who don't now use the Web to convert to online trading. The firm hopes to attract about 200,000 people to the seminars next year. Schwab began the customer training two months ago and 30,000 people have attended. The move is effort by the biggest Internet broker to respond to competition from Merrill and Morgan Stanley Dean Witter & Co. Both of those firms have created online trading businesses in a bid to capture some of the growth in Web stock transactions, which now account for one in six U.S. equity transactions. A Merrill spokeswoman said customers like the firm's new Internet service. ``The early success and incredible momentum of our choice platform for clients speaks for itself,' said Susan Thomson. She declined further comment. Fighting Back Schwab said 70 percent of the people who attend the seminars - dubbed WebShops - take up online trading immediately. ``This fits right into our concept of customer service and customer education and it's inconceivable to me to see Merrill Lynch or Morgan Stanley bring customers in and try to convert them.' Charles Schwab Corp., founded by Chuck Schwab in 1971, will also advertise its stock recommendations next year, he said. ``We'll be much more overt in our recommendations,' he said. ``For investors who might just be getting started, we have to help get them on the right path. That's a big part of our mission as a company.' Full-service firms aren't taking assets from his company, the 62-year-old Schwab said. Charles Schwab Corp. added $25 billion in new customer funds in the third quarter and the company is now ``doing better than that,' he said. ``We're not overly optimistic that they're going to be that successful,' he said. ``We haven't seen any bite at all. In fact, the Merrill Lynch's recent ad campaign mentioning us as No. 1 in online, I have to thank them for it.' Merrill, he said, is also sending ``mixed messages' by having three different offerings: a full-service brokerage account, a fee-based account with unlimited trades for $1,500 or more a year, and the discount brokerage product. `Well-honed' ``We're sort of a well-honed company and they're new entrants into this business,' said Chuck Schwab. ``I don't think they can really reorient their culture and be significant competitors in the space that we're in.' The WebShop seminars are aimed at the 77 percent of Internet users who consider themselves investors and don't use the Web to invest, based on a Schwab-sponsored Harris Interactive Inc. survey of 2,239 Internet users. Fully 28 percent of respondents said they aren't online investors because they like having a broker or advisor; 19 percent are afraid of making a technical mistake; 18 percent are worried about security, and 9 percent fear it's too difficult. The seminars can help allay many of those concerns, Chuck Schwab said. For example, ``we do over $2 billion a day of transactions and we have no security issues,' he said. The company will disclose November trading activity next week. Schwab stock rose 2 1/4 to 40 1/4. The stock is up 43 percent this year, less than the 61 percent rise in the Bloomberg U.S. Internet Financial Services Index. Schwab stock peaked at 77 1/2 on April 14. ``The fury of the Internet got carried away and the stock got ahead of itself,' said Chuck Schwab.