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Schwab profit up 110%
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April 15, 1999: 10:38 a.m. ET
Discount broker cites trading, commissions, jump in online business
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NEW YORK (CNNfn) - Charles Schwab Corp. Thursday noted an interesting fact as it said profits more than doubled in the first quarter: online trades accounted for nearly two-thirds of the trades its customers made during the quarter.
That was up from a year earlier when online trades accounted for 48 percent of all trades at Schwab, the nation's biggest discount and biggest online broker. The growth reflects Americans' love affair with the stock market and, increasingly, Internet investing.
Schwab's results were close to Wall Street forecasts, but Schwab stock tumbled 17-1/4 to 121 on the New York Stock Exchange after running up 40 percent in the five sessions through Tuesday.
The stock, which is still more than twice its level at the start of 1999, has soared as investors, and especially online "day traders," have bid up Internet-related stocks, trading that itself helped boost Schwab's results in the quarter.
Schwab said net income soared to $143 million, or 34 cents a diluted share, in the quarter, from $68 million, or 16 cents a share, a year earlier. Analysts had raised their forecasts to 33 cents a share from 26 cents a share, according to First Call, after Schwab said last month it expected to earn 31 cents to 34 cents a share in the first quarter.
By almost any measure, Schwab's business soared in the quarter. The San Francisco-based brokerage said customers opened 388,000 new accounts, bringing its total to 5.9 million, more than the 5 million retail accounts at Merrill Lynch (MER), the nation's biggest broker, which Tuesday reported record results that beat Wall Street forecasts.
While its business is soaring, Schwab has used the Internet and other technology to help keep costs down. Schwab said it had 14,800 employees at the end of the quarter, up 11 percent from a year earlier.
President David Pottruck said the company's Web site handled 50 million "hits" each business day during the quarter, and online trades accounted for 65 percent of all trades, up from 12 million and 48 percent a year earlier.
The momentum in its online business has continued into April, he said.
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Charles Schwab
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