updated 7/20/2004 10:43:11 AM ET 2004-07-20T14:43:11

Discount broker Charles Schwab Corp. dumped CEO David Pottruck on Tuesday and replaced him with founder Charles Schwab, hoping the man who created the company can rejuvenate a business that has been sputtering for several years.

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The San Francisco-based company made its surprise announcement as it released its second-quarter results. Schwab reported a 10 percent drop in its profit for the three months ended June, ending a recent streak of improved earnings.

Pottruck's departure comes 14 months after the company appointed him as is sole CEO. He had shared the CEO job the previous five years with Schwab, continuing a longtime partnership between the two men.

But the company's spotty performance in a volatile stock market apparently prompted the decision to bring back Schwab, who had been acting as chairman of the board, a position he will continue. The company said Schwab, 66, will remain its CEO indefinitely.

"The last few years have been difficult in the securities markets, and I accept the board's decision that it's time for me to step aside," Pottruck said in a written statement. "It's been a great journey."

The company's continuing problems will cause an unspecified number of employees to lose their jobs, according to Christopher Dodds, Schwab's chief financial officer. The job cuts are part of Schwab's efforts to reduce its annual expenses by $150 million to $200 million annually, Dodds told analysts during a conference call Tuesday.

Mass layoffs have become commonplace at Schwab in recent years. The company has eliminated more than 10,000 jobs since its revenue peaked nearly four years ago.

Schwab applauded Pottruck as a "valued partner" and expressed confidence that the brokerage will rebound.

"As I see the opportunities ahead for Schwab, I want to underscore my confidence in the strength of our franchise, the value we provide our clients, the dedication of our employees, and the depth of our management team," Schwab said.

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