Schwab has already eliminated 7,200 employees, or about 27% of its workforce, since the beginning of 2001. Like those layoffs, this round is strictly a cost-cutting measure due to difficult market conditions, according to the firm.
"The major market indices all experienced double-digit declines during the first seven months of 2002, while recent surveys of our own clients show a decline in confidence in the stock market since last year," said Schwab Chairman and Co-CEO Charles Schwab, in a statement. "These conditions, fueled by the continuing investigations of corporate accounting and governance practices at certain firms, have put ongoing pressure on our financial performance and deepened our belief that the environment in which we operate may continue for some time. Accordingly, we are taking further actions to realign our resources and improve our performance."
The firm also indicated that over the next 30 to 60 days the companys executive committee will consider further actions to reduce its operating expense, including more layoffs and a reduction in discretionary spending.
Schwab expects yesterdays cutback to result in pre-tax restructuring charges of approximately $36 million and to reduce pre-tax operating expenses by approximately $26 million in 2003. The goal of the future cuts not yet determined is to reduce the companys operating expense base by about $200 million.
