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Charles Schwab Corporation

Charles Schwab Corporation. The leading discount broker Founded late 1970s Internet profound challenge New entrants trade and Ameritrade, Merrill Lynch doing nothing February 19, 1999 Schwab approach (1996-1997) E-Schwab, Skunk Works Reports to Co-CEO Dave Pottruck.

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Charles Schwab Corporation

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  1. Charles Schwab Corporation • The leading discount broker • Founded late 1970s • Internet profound challenge • New entrants trade and Ameritrade, Merrill Lynch doing nothing February 19, 1999 Schwab approach (1996-1997) • E-Schwab, Skunk WorksReports to Co-CEO Dave Pottruck

  2. Charles Schwab Corporation • January 15, 1998 - New Product price: $29.95 • E-Schwab leader heads electronic brokerage • No advertising, but • First 5 months 1998, 500,000 new on-line accounts 440 billion assets

  3. Charles Schwab Corporation • Two centers: Phoenix (20 miles) - 99.2% • 100% control IT by Schwab • IT staff-80% baby boomers • 70% new customers offices • 86% trades on-line • 75 million hits/day-largest encrypted secure site • 15% to17% technology/revenue

  4. Charles Schwab Corporation • Q1 1998 Sales (3%) • Profit (16%) • Stock (18%) • Merrill stock + 29% • End 1998 - 1,000,000 new accounts (40% all) • Sales +19% • Profit +29% • Stock +158% (2nd half)

  5. Charles Schwab Corporation • End 1998 – Schwab Market Cap $25.5 billion – Merrill Market Cap $25.4 billion • April 1999 – 75 million hits/day – $100 million cost savings – 4,000 transactions/second – 15% - 17% revenue to technology work – IT staff (1300 January 1998) to 2000 – Spike surge protection

  6. Charles Schwab Corporation • June 1999 – Merrill announces $29.95 – 30% - 35% all individual stock trades on Internet • December 1, 1999 – Merrill Lynch implements new price

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