The San Francisco company hinted in August that it would be making cuts, but provided no numbers. At that time, the company had about 18,800 employees.
It was not immediately known what business units would be targeted by the layoffs, which are expected to be completed by the end of November, Schwab spokesman Greg Gable said.
The firm, which grew at a record pace to employ about 26,800 people at the end of 2000, has struggled to pare costs and find new revenue sources. One rival, E*Trade Group Inc., has outperformed Schwab by focusing on its banking division, which has helped it collect assets and generate revenue during the decline in online trading.
Schwab is trying to attract wealthier clients who will pay for investment advice, so it can rely less on individual investors buying and selling stocks.
The company also said yesterday that it expected to earn 7 cents to 8 cents per share in the third quarter. Analysts surveyed by Thomson Financial/First Call were expecting an average of 8 cents per share. In last year's third quarter - which included four trading days when the stock market was closed because of the Sept. 11 attacks - Schwab earned 1 cent per share.
While trading volume fell last month from earlier in the summer, August's average was up 3 percent from a year ago. The averages exclude mutual-fund trading. Shares of Schwab closed down 60 cents, or 6.1 percent, yesterday at $9.15 on the New York Stock Exchange.