Charles Schwab Cuts Online Commissions

SAN FRANCISCO - Slumping stock broker Charles Schwab Corp. is cutting its online prices for all customers, hoping to lure back bargain-minded investors alienated by the higher fees the company has imposed in recent years.

The price cuts announced Monday represent the San Francisco-based company's latest attempt to return to its discounting roots _ a heritage that helped establish Schwab as the brokerage that made investing more affordable for the masses.

But smaller, more nimble brokerages such as E-Trade Financial Corp., Ameritrade Holding Corp. and TD Waterhouse have been undercutting Schwab in recent years by building less expensive trading channels on the Internet.

Looking to regain a competitive edge, Schwab's basic commission for online stock trades of up to 1,000 shares will fall 33 percent, from $29.95 to $19.95, effective Nov. 1.

Schwab has been offering that lower price since mid-June to customers with combined account balances of at least $100,000.

The brokerage also is lowering its commissions on a wide array of other services.

"At Schwab, price won't be a barrier to investing success," said chairman Charles Schwab, who returned as CEO 2 1/2 months ago to engineer a turnaround.

Schwab's prices will remain higher than some of its rivals. But the brokerage believes it is offering the best deal with a mixture of basic services and investment advice, said Schwab spokeswoman Sarah Bulgatz. "We are not trying to offer the lowest prices."

Schwab has been struggling for the better part of four years _ a period marked by eroding revenue and a series of mass layoffs that jettisoned more than one-third of the company's work force.

The latest price cuts will trim Schwab's revenue by even more. The company warned that the lower commission may shave about 2 percent from its sales during the next year. The estimate translates into a $90 million decline, based on Schwab's recent revenue trends.

Schwab expected its previous price cuts to reduce its revenue by about $140 million.

Schwab's shares fell 15 cents Monday to close at $9.07 on the New York Stock Exchange.

To offset the revenue lost from its price cuts, Schwab will continue to clamp down on expenses. During the summer, the company eliminated about 500 jobs and closed 53 branches to save money. Management expects to cut another 400 to 600 jobs by the end of the year.

The cost cutting will save Schwab about $200 million next year, Schwab predicted Monday.

The brokerage is betting that its lower prices eventually will pay off by luring back customers who have been turned off by a series of new fees introduced in recent years. Schwab began charging more as it introduced more sophisticated services, but the broader selection hasn't appealed to many investors who preferred the brokerage's bare-bones, self-service approach.

Schwab's earlier price cuts haven't translated into more business so far. The company's daily revenue-producing trades during July declined by 10 percent from last year and average trades in August dropped by 6 percent.

Bulgatz said market conditions have deteriorated since last year, depressing trading activity at all brokerages. For instance at E-Trade, daily revenue-producing trades plunged by more than 20 percent during July and August.