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Schwab slashes costs
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January 30, 2001: 4:39 p.m. ET
Biggest U.S. discount broker to tell employees not to show up for work
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NEW YORK (CNNfn) - Charles Schwab Corp., the No. 1 U.S. discount brokerage, is imposing huge cost-cutting measures that include telling employees not to show up for work, the company confirmed Tuesday.
The move will affect about 30 percent to 50 percent of the company's 26,000 employees, a company spokesman told CNNfn. Only the most critical operations, including call centers, retail Web sites and other trading functions, will not be affected. Branch offices and client service centers will remain open.
"In no way, shape or form are we closing branches or affecting customer service," Schwab Spokesman Dan Hubbard said. "We're a service business."
 In addition to asking people not to show up for work, the San Francisco-based firm could be shuttered on Fridays, a Schwab spokeswoman said.
But the company said it has no plans for layoffs at the moment.
Affected offices include marketing and administrative support services.
Employees will be required to take Feb. 2, Feb. 16 and March 2 as vacation days, which will be counted from the employees' vacation allotment.
Schwab's woes reflect those of other financial services companies of late as investors pull back from stock trading in the wake of an economic downturn that has caused a market slump.
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Schwab's fourth-quarter earnings fell 27 percent, and came in slightly below expectations as a result of the slowdown.
While diversified financial services firms were able to offset such losses with other services such as advising firms on mergers and acquisitions, or underwriting initial public offerings, small discount brokers that cater to individual investors such as Schwab have taken the worst hits.
Amy Butte, financial services analyst at Bear Stearns, said Schwab's news was evidence that the retail financial-services business is still struggling. She also said the job cuts aren't likely to help Schwab's bottom line much, estimating their impact at less than a penny per share of earnings.
Still, Butte said, "The good news is, they didn't announce layoffs, so they are signaling that this is a short-term issue."
In trying to avoid cutting its work force, Schwab recently announced that salaries for the managers will be reduced in January and February by as much as 50 percent for top executives, the Journal said.
To further cut costs, the firm is reducing its travel budget.
Schwab (SCH: Research, Estimates) shares fell $1.29 to $27.29, a more than 4 percent drop. 
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