Schwab May trades down
UPDATE 2-Schwab May trades fall as clients stay sidelined
Tue Jun 14, 2005 11:37 AM ET
(Adds CFO and analyst comments, byline.)
By Chris Sanders
NEW YORK, June 14 (Reuters) - Charles Schwab Corp. (SCH.N: Quote, Profile, Research) , the largest U.S. discount brokerage, on Tuesday said customer stock trading in May fell 7 percent, compared with April, as a lack of market volatility dampened clients' desire to trade.
But the company has seen trading activity improve slightly in June, Chief Financial Officer Chris Dodds told Reuters in an interview. Schwab shares fell nearly 2 percent in early trading.
"May trading activity was a bit more subdued than April's levels, in part due to some relatively sideways market conditions," Dodds said.
The company is comfortable with analysts' estimates that the discount brokerage will earn 13 cents a share in the second quarter, Dodds said, adding that he does not see any reason to back off from the company view that it will earn 50 cents a share in 2005.
Wall Street analysts had forecast the company would earn 53 cents a share on average in 2005, according to Reuters Estimates.
Daily average revenue trades totaled 169,400 in May, down 7 percent from April, but up 25 percent from a year earlier, Schwab said in a statement.
Fox-Pitt, Kelton analyst David Trone wrote in a research note that asset inflows and trading activity were modestly lower than his expectations.
"The trends are slightly worse than expected, but with equity markets still down on the year, this is not too surprising," he wrote.
Net new assets brought to the company by new and current clients in May 2005 totaled $3.9 billion, compared with $4.4 billion a year ago, as its mutual fund clearing and 401-K businesses slowed.
Last week, Schwab rival Ameritrade Holding Corp. (AMTD.O: Quote, Profile, Research) said its average client trades per day during May fell to their lowest monthly level since September.
At the end of May, Schwab cut its fees for online options trading -- the third time in six months that it lowered some fees -- underscoring the stiff competition among online brokers. Schwab, E*Trade Financial Corp. (ET.N: Quote, Profile, Research) , and Ameritrade are embroiled in a price war to attract and retain customers.
Schwab said total client assets were $1.092 trillion at end of May, up 11 percent from a year ago and up 3 percent from a month earlier.
San Francisco-based Schwab said client daily average trades were 190,300 in May, down 7 percent from April and up 27 percent from a year earlier.
Schwab shares were down 21 cents at $11.59 in early trading on the New York Stock Exchange.
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