With February trading activity down 21% from a year ago, Charles Schwab & Co. announced yesterday that it would put a freeze on new hires and capital investments and reduce expenses to save $40 million a quarter, "until such time as the business environment improves," David S. Pottruck, president and co-CEO said.
Pottruck called the current business environment, one where the recession is said to be over but the lingering ill-effects of the burst technology bubble are said to be lingering, "an extraordinary set of short-term circumstances."
One of the so-called "adjustments to certain employee benefits" that Schwab announced yesterday will be the temporary elimination of the firms matching contributions to employees 401(k)s, The New York Times reports. Schwab joins a growing number of American corporations, particularly in the automotive industry, that are suspending their 401(k) contributions to cut costs, reports The Times, which said Schwabs matching program has been "generous."
Shares of the company, which has reduced its workforce by 35%, or 9,000 jobs, since the end of 2000, rose 6.1% yesterday, to $7.12, on the news.