This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Schwab Shuns Deal for Rivals

Charles Schwab (SCHW) is putting together a shopping list, but apparently an online broker isn't one of the things it's looking to buy.

The San Francisco-based broker is throwing cold water on speculation that it could use some of the cash it's getting from the sale of its U.S. Trust business to buy an online competitor such as E*Trade (ET) or TD Ameritrade (AMTD).

Speaking at a Monday evening investor conference, CEO Charles Schwab says there's little value in buying another online firm. He says such deal would cost well over $10 billion.

The market caps of both E*Trade and Ameritrade are about $10 billion.

Instead, Schwab says he's interested in getting into the 401K administration business, or using some of the proceeds from the U.S. Trust sale to continue buying back the discount broker's shares.

Schwab's comments about the prospects for an online acquisition came as a surprise, says Brad Hintz, a Bernstein analyst, in a recent note.

The news also seemed to surprise investors banking on a possible buyout of E*Trade or Ameritrade. In midday trading Tuesday, shares of both online firms were trading down, with Ameritrade falling 13 cents to $16.75 and E*Trade sliding 39 cents, or 1.6%, to $23.09

Shares of Schwab, meanwhile, are trading higher, rising 11 cents to $18.59.

Two weeks ago, Schwab announced it was selling its U.S. Trust asset management business to Bank of America (BAC). Schwab, which acquired the asset manager in a deal valued at $2.7 billion some six year ago, expects to record a pretax gain of $1.9 billion from the sale.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs