Schwab Only Partial Read on Online Brokers (SCHW, ETFC, AMTD)

By Douglas A. McIntyre Updated Mar 25, 11:39PM EDT · Published Dec 14, 12:45PM EST

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Charles Schwab Corp.(NASDAQ: SCHW) is acting as a drag on the online brokerage firms today. Schwab warned that its fourth quarter results would come in weak due to lower trading volumes and due to increased management fee waivers over money market mutual funds. This is having a loose impact on E*TRADE Financial Corp. (NASDAQ: ETFC) and in TD AMERITRADE (NASDAQ: AMTD).

The online brokerage giant now sees $0.13 to $0.15 EPS vs. $0.17 last quarter. Thomson Reuters has consensus of $0.17 EPS and $1.04 billion in revenue. Management fee waivers on Schwab’s proprietary money market mutual funds is likely to increase by $30 million from total waivers of $78 million one quarter ago. Another issue is an increase in its seasonal marketing.

The good news for E*TRADE and AMERITRADE is that it seems as though Schwab has been more exposed to these fee waivers. The bad news is that no one ever escapes lower trading volumes. It almost never happens that one of the big online brokerage firms has a significant trading volume versus a gain magically coming in at another.

Schwab stock was down 2.6% at $17.94, and even after noon the volume has yet to breach a full day’s volume. E*TRADE was down only 0.6% at $1.65 on very light trading volume; and TD AMERITRADE was down o.6% at $18.47 but up off lows of the day on fairly light volume.

This might also be of little shock to those who have read about trading volumes in the last 30 days or so. This may also act as a catalyst to drive more of those rumors about E*TRADE being a fair game buyout candidate by either of the companies in this action today.

JON C. OGG

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.