'Everything is on the table' as financial firm tries to trim $150M
July 11, 2004
Charles Schwab Corp. started a round of layoffs this month that some fear could climb into the thousands as the company struggles to find its footing in the market place.
The company cut more than 200 people at its Orlando, Fla. call center, accounting for about a third of its staff in that city. A "very small number" of layoffs have also occurred in San Francisco, Schwab spokesman Glen Mathison said.
The layoffs came as little surprise to affected employees, who were told in a companywide email a month ago that the company would be downsizing. But the pioneering San Francisco brokerage did not disclose the timing of the cuts or their location.
"The layoffs will be in the thousands," according to one source familiar with the situation. The company employs almost 17,000.
Schwab's Mathison confirmed that layoffs will be among the measures taken to reach the company's goal of trimming expenses by $150 million, or 4 percent to 5 percent of total expenses, by year-end.
"Everything is on the table," Mathison said. "Layoffs will occur, but there is no target set to achieve those cost savings."
He said any expectation of thousands of layoffs would be vastly inaccurate.
The imminent threat of layoffs is taking its toll on morale.
"Schwab is a depressing place to work right now," another source said.
One indication of the angst among the troops, a source said, was one worker asking CEO David Pottruck at an employee meeting about speculation that the well-respected executive who has been with the firm two decades might be heading toward the exit, a source said. That's speculation Pottruck strongly denied, the source said.
Pottruck and his team have their work cut out for them.
The brokerage already warned Wall Street that second quarter earnings, to be released later this month, will not meet investors' original expectations.
A sign of the company's problems was evident in the 15 percent decline in May trading activity from the previous month. The June figures were not released prior to press time. The company's stock traded near $9 a share this week, slightly above its 52-week low of $8.75.
The troubles afflicting Schwab prompted the company last month to trim commissions, especially for its active and wealthy clients.
Pottruck was forthcoming about the challenge facing Schwab when speaking at an industry conference in New York last month.
"We are not a discount broker, and we are not an advice provider," Pottruck said. "Right now we are a hybrid, and being in the middle is not healthy."
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