| We are witnessing huge growth in the share of the population that is investing in the stock market. Investment varies from low risk and low growth stocks and funds to high risk and high growth stocks and funds. The intermediaries that enable this process of investing in stocks and mutual funds are significant beneficiaries of this trend in the populace. These intermediaries range from firms that advise customers on their investment choices and execute their choices (full service brokerages), to those that simply execute the orders of their customers (discount brokerages).This paper begins with a comprehensive overview of Charles Schwab and comprises the aforementioned intermediaries. Some of the highlighted areas includes: Schwab's multitude of products and services; business model strategy (old and new); the investment cycle; employees' incentive programs (salary & commissions); information technology platform overview; and the code of conduct and compliance within the company. It then focuses on the discount brokerage industry in particular. This industry sector is analyzed in detail using Porter's (1985) framework for industry competitive analysis. In the subsequent section, the considerable impact of information technology on the trading process is studied. Moreover, the paper will address some similarities and differences between Schwab and Merrill Lynch. It will focus on the online business approach and the extent whereby their target audience overlap. Though they share many of the same characteristics such as broker compensation and transaction reporting as required by law, they target very different aspects of the market and have greatly different clientele.Finally, a discounted cash flow model (DCF) is devised to analyze Schwab's (SCH) 2003 acquisition of SoundView Technology (SNDV). It will focus on two main areas: the synergy level among the two companies; and using a conservative to progressive approach in forecasting the return on investment for the acquisition.
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