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Schwab Trims Earnings Guidance

It sees fourth-quarter net of 14 cents a share.
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said fourth-quarter earnings will fall from the third quarter and miss analyst estimates. It blamed a new advertising campaign, the elimination of certain fees and severance costs.

Schwab put its fourth-quarter profit at 14 cents a share, down from the 16 cents it earned in the third quarter and below the 16-cent Thomson First Call consensus estimate. The forecast came in an otherwise strong report on October client activity, including a 52% year-over-year jump in daily average trades to 258,900.

"As previously disclosed in September, we are pursuing two growth investments to enhance the Company's business momentum -- the elimination of certain fees and a new national advertising campaign -- which are expected to impact fourth-quarter earnings by approximately $40 million pretax," Schwab said.

The company will also record $10 million of pretax severance charges related to staff reductions at its U.S. Trust unit. Taken together, the ad campaign, the fee reductions and the severance expense account for the sequential decline in earnings.

The stock fell 36 cents, or 2.3%, to $15.64 Tuesday morning.

In October, Schwab said net new assets brought to the company by new and current clients totaled $7.6 billion, driving a 13% rise in end-of-month client assets to $1.152 trillion.