Global Finance: Schwab's Profits Slide As Costs Creep Higher
Charles Schwab Corp.'s second-quarter earnings missed analysts' estimates as the discount brokerage's expenses climbed 8.7% from a year earlier amid higher compensation and technology costs.</br></br>The San Francisco company posted net income of $256 million, or 18 cents a share, down from $275 million, or 20 cents a share, a year ago. The year-earlier period included a benefit of $70 million, or roughly two cents a share, related to the resolution of a vendor dispute.</br></br>The results put pressure on Schwab's stock, which has rallied this year. The company's New York Stock Exchange-listed shares fell 3.3% to $21 in 4 p.m. trading Tuesday but remain up 46% so far in 2013.</br></br>While Schwab's earnings excluding the earlier gain rose 11%, investors focused on the per-share figure, which was a penny below Wall Street's average forecast of 19 cents. The shortfall came as Schwab missed its own forecast for curbing some quarterly expenses, such as employee pay. The company's expenses are still tracking above a new target it issued for such costs for 2013.</br></br>In March, Schwab backed away from a planned spending push it outlined at the beginning of the year because trading volumes didn't rebound as the company had expected after the U.S. presidential election.