Wednesday, April 15, 2009

Schwab Declares Itself Strong

Charles Schwab (SCHW) declared Q1 results and in a masterful exercise of Reg FD compliance declared in the press release headline the results are strong. So strong that in the lead paragraph they explained how they lost so much money. Given the state of the markets it is not unusual to print red ink. Essentially for the time being the business model is how to cut costs quickly as your revenues disappear. There was some nostalgia for the old days as they refer to some glimmers of hope in March and modest signs of life and growth.

While markets are cyclical they do not rebound automatically. Every recovery is different; paradigms shift. The question is cost reduction enough or do we need some really new thinking to go forward into the future. So far Schwab seems to be focused on cost control exclusively.