Merrill Takes $5.5 Billion Write-Down

Merrill Lynch announced it would be writing down about $5.5 billion when it posts third quarter results. About $4.5 billion of the write down is a result of the company marking to market the value of its collateralized debt and subprime mortgages. Much of the rest comes from losses on loans related to leveraged buyouts. "Despite solid underlying performances in most of our businesses in the third quarter, the impact of this difficult market was much more severe in certain of our FICC [fixed income, currencies and commodities] businesses than we expected earlier in the quarter," said CEO Stan O'Neal. Because of the large write-down, Merrill said that it would report a third-quarter net loss of $0.50/share. Analysts had been predicting this move, especially after Citigroup and UBS both announced they would take multi-billion dollar write-downs on Monday (full story). Shares of Merrill were up 2.0% to $76.27 in late morning trading Friday.

Sources: MarketWatch, WSJ
Commentary: Goldman Analyst Slashes Targets for Merrill • Merrill Lynch, Bear Stearns Hardly Out Of the Woods
Stocks/ETFs to watch: MER, C, UBS. ETFs: IAI, KCE
Earnings call transcript: Merrill Lynch Q2 2007 Earnings Call Transcript

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Comments

[brij srivas...:]

Sub-prime lending went on unabated for long.No body checked the damage it could pose until it raised its ugly head up.This whole business was so corporatised that no one was willing to blow the whistle.....as everyone in it was well greased to let it go on.....after all it was the depositors money that was being blown ruthlessly.Now shareholders are bearing the brunt.

2007 Oct 07 04:01 AM