Merrill Lynch posts $4.9-billion loss

[Anonymous]

Reuters

July 17, 2008 at 6:31 PM EDT

NEW YORK — Merrill Lynch & Co. Inc. on Thursday reported a much larger-than-expected $4.89-billion (U.S.) quarterly loss because of soured holdings of mortgages and other risky debt, and unveiled plans to sell billions of dollars of assets to shore up capital.

The loss was the fourth straight one for Wall Street's third-largest investment bank, and was more than twice as big as analysts expected. Chief executive officer John Thain called the quarter "difficult and disappointing."

Shares of Merrill fell $1.83, or 6 per cent, to $28.90 in after-hours trading. They had risen $2.73, or 9.8 per cent, during the day after JPMorgan Chase & Co. posted better-than-expected second-quarter results.

Merrill said it signed a letter of intent to sell a controlling stake in its Financial Data Services Inc. unit, which provides mutual fund administrative services and offers retail banking products, to an undisclosed party in a transaction valuing the unit at more than $3.5-billion.
Merrill Lynch

It also said it has completed and is helping finance the long-expected sale of its 20 per cent stake in Bloomberg LP, the news and financial data company, to Bloomberg Inc. for $4.43-billion.

"They're moving in the right direction but Merrill still has significant challenges, including material exposure to collateralized debt obligations," said Chris Armbruster, an analyst at Al Frank Asset Management, which holds 24,000 Merrill shares. "We like the company, but it's going to be a tough go."

The quarterly loss applicable to common stockholders equalled $4.97 per share, and compared with a profit of $2.07-billion, or $2.24 per share, a year earlier.

Excluding restructuring charges, Merrill lost $4.42 per share, compared with the $1.94 per share loss that analysts on average expected, according to Reuters Estimates.

Merrill recorded $9.4-billion of writedowns from exposure to CDOs, residential mortgages, bond insurers and other investments.


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Things are moving along then, we just need more to fall and then the crash will come along...