Merrill Lynch Posts Biggest Loss Ever

Thursday, April 17, 2008 | | |


Merrill Lynch & Co on Thursday posted a nearly $2 billion first-quarter loss, and said it plans to cut 4,000 jobs after suffering several billion dollars of write-downs for subprime mortgages and other risky assets.

The job cuts cover about 10 percent of staff at the world's largest brokerage, excluding financial advisers and investment associates. Merrill Lynch said the job cuts will be targeted in markets and investment banking operations and in support areas. The company said it ended March with 63,100 employees overall.

Merrill Lynch's quarterly net loss was $1.96 billion, and compared with a profit of $2.16 billion a year earlier.

Including preferred stock dividends, the loss was $2.14 billion, or $2.19 per share, and compared with a profit of $2.11 billion, or $2.26, a year earlier.

The loss from continuing operations was $2.20 per share. On that basis, analysts on average expected a loss of $1.96 per share, according to Reuters Estimates.

Net revenue declined 69 percent to $2.93 billion. Analysts expected revenue of $3.35 billion.

Chief Executive John Thain said that despite the loss, Merrill Lynch remains "well-capitalized."

Merrill Lynch had already recorded more than $24 billion of write-downs in prior quarters. These spurred it to raise more than $12 billion of new capital. Thain said this month he did not expect to raise more capital in the foreseeable future.

Results reflected a $1.5 billion write-down related to collateralized debt obligations tied to asset-backed securities, and a $3 billion write-down linked mainly to so-called "super-senior" CDOs tied to asset.

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