With revenue in its core discount operations evaporating, Charles Schwab ( SCH) has been remaking itself in the image of the traditional brokerages it once sought to displace. It has extended a push into advisory and banking services and is going after wealthier clients. The initiatives reflect the difficulty all brokers are having lately and particularly discount outfits that have seen their less affluent client base chased disproportionately from the market. Schwab's fourth-quarter revenue plunged 18% on a 26% decline in average daily trading and January trading volume was lower than December's. The obstacles were the subject of a research note this week from Robertson Stephens analyst Justin Hughes, who predicted declines in Schwab's retail trading activity both for this month and the first quarter. After a year in which the company's shares shed 39%, the stock has fallen another 27% to $13.15 since a market minipeak on Jan. 4. Other major online, discount and full-services brokerage houses have also been
losing ground since early January. In an attempt to rein in costs, Schwab cut its staff by 25% in 2001, closed operations in Australia and Japan, and recently sold its Canadian unit to the Bank of Nova Scotia.