CSBFdirect, the mostly online brokerage unit of Credit Suisse First Boston, said Thursday that it will lay off 180 staff, bringing its tally of layoffs for the year so far to 24%.
In March the company laid off 150 employees when it closed one call center near its Jersey City headquarters and thinned the ranks at other centers. But on Thursday, Blake Darcy, CSFBdirects chief executive, said persisting market volatility had once again forced it to reevaluate staffing.
We have tried to avoid cuts; its the last thing you want to do as an organization, he said in a telephone interview. We had been hoping that the market activity would pick up, but its been at historic lows.
CSFBdirects story is familiar in the world of online trading. After staffing up during the boom times of Internet trading, when retail investors flocked to their personal computers to participate in the double-digit gains attainable by investing in technology stocks, discount brokers now find themselves overstaffed.
Charles Schwab & Co., the nations biggest online brokerage company, has eliminated 13% of its work force. Ameritrade and others have also let people go.
The latest layoffs at CSFBdirect, which started Thursday, will involve roughly 90 people in its technology area and 90 from virtually every group, Mr. Darcy said.
The company will also cut its spending on advertising and will reduce office space in Charlotte, N.C., and Jersey City. CSFBdirect will take a one-time pretax charge of $16 million in the second quarter in connection with the moves announced Thursday.
However, Mr. Darcy said the companys plans to open up to 50 branch locations in metropolitan areas around the country will not be affected. It already has branches in Boca Raton, Fla., New York, Atlanta, and Philadelphia, and intends to open one in Chicago early this month and two in Salt Lake City and Scottsdale, Ariz. shortly thereafter.
Mr. Darcy said that CSFBdirect, which targets investors with $100,000 and more to invest, values a hybrid approach.
We started as an hands-on-only company, he said, but you have to give your customers multiple ways of accessing your service. We think branches are important.
Asked his prognosis for the stock market, Mr. Blake said, I guarantee you that absolutely no one knows.
It seems that most of Mr. Darcys peers are also not betting on a turnaround this year. Basically all the brokers you talk to are taking a bearish viewpoint for the full year, said equity analyst, Richard Repetto, of Putnam Lovell Securities.
And though Mr. Repetto said he thinks that most discount brokers are now done trimming staff, he noted that trends depend on where the market goes. If the markets deteriorate significantly from here, all bets are off, he said.
On Thursday, CSFBdirects stock fell 80 cents to $4.97. In March, CSFBdirects parent, Credit Suisse First Boston, announced plans to buy back all publicly held shares of the discount broker to remove it from the public spotlight as the stock fell amid market volatility. Credit Suisse First Boston owns a majority stake in the company.