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Schwab 2Q net doubles
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July 16, 1999: 11:35 a.m. ET
Brokerage cites April trading boom, but online growth may hurt profit
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NEW YORK (CNNfn) - Charles Schwab Corp., helped by an April boom in securities trading, said Friday its net income doubled in the second quarter but warned profit margins may suffer as it continues to stake its claim in cyberspace.
The San Francisco-based discount broker earned $151 million, or 18 cents per diluted share, up from to $76.3 million, or 9 cents, a year earlier. The consensus of analyst expectations was for Schwab to report earnings of 17 cents a share, according to market research firm First Call Corp.
Revenue rose 54 percent to $982.1 million.
But amid its intense effort to remain the top online broker, Schwab said it expects spending in order to tap that market could put pressure on profit margins in coming quarters. Schwab said its full-time staff rose 20 percent from a year ago to 15,800.
"Our ongoing investments in people, technology and our brand may cause our profit margin for the second half of 1999 to move back towards the levels we've achieved in recent years," said Charles Schwab, chairman and co-chief executive officer.
Schwab (SCH) shares fell 2-11/16 to 52-11/16 early Friday.
The second-quarter improvement at Schwab, executives said, stemmed from a trading spike in April that compensated for a sharp drop in volume thereafter. Its daily average commission-producing trades fell to $124,000 a day in June, after peaking at $207,700 a day in April.
In the quarter, Schwab drew $23 billion in new assets -- bringing total assets under management to $592 billion -- and opened a record 422,000 new accounts. Net-based trades accounted for 67 percent of all trades in the second quarter.
"Our continued leadership in online investing is reflected in the growing number of customers using these services at Schwab," said President and Co-Chief Executive David Pottruck. 
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Charles Schwab
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