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Schwab cuts more jobs
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August 30, 2001: 9:32 a.m. ET
Discount broker paring 9%-11% of staff as trading activity slumps
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NEW YORK (CNNfn) - Discount brokerage Charles Schwab Inc. is cutting 2,000 to 2,400 more jobs, or 9 to 11 percent of its work force, on top of substantial cuts made last year, as a result of lower trading volumes, the company said Thursday.
Schwab (SCH: down $0.12 to $12.08, Research, Estimates) expects to take a pre-tax charge of $225 million for the remainder of fiscal 2001 due to the restructuring. The company also anticipates the move will reduce pre-tax operating expenses by about $65 million a quarter beginning in the first quarter of fiscal 2002.
Chairman and CEO Charles Schwab blamed the volatile markets brought on by the slowing economy, noting that his company's clients have trimmed investing activity by about 50 percent since the beginning of the year.
"Given the severity of the pullback in client activity and our outlook regarding the potential duration of this environment, we are taking further measures to improve our financial performance while maintaining appropriate capacity, providing superior client service and sustaining essential investments in the company's future," Schwab said.
The job cuts include "mandatory" staff reductions of 1,600 to 1,900 full-time employees and about 200 contractors by the end of October. An additional 200-300 jobs are to be cut during the remainder of the year through voluntary attrition, the company said.
The cuts reduce Schwab's employee base by a quarter of its staffing levels at the beginning of fiscal 2001.
In addition to job cuts, Schwab also plans "reductions" in its existing facilities as well as the removal of certain systems hardware from service.
The company said Aug. 15 that it planned to cut jobs to deal with sharply lower trading volume. The cuts come on top of a sharp reductions at the end of last year that brought staffing levels down from 26,300 at the end of last year to 22,400 at the end of June.
Schwab has been struggling to cut costs, doing everything possible short of eliminating jobs such as telling employees to take extended vacations or not show up for work, over the last year as the economy continued to slow.
However, it was not enough to boost the bottom line, and cuts became inevitable.
Schwab is not alone. Most discount brokerage firms have had to deal with sharply declining trading volume as market volatility continues, prompting clients to pare back market activity as well as other types of spending. 
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Charles Schwab
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