Merrill Lynch Reports Biggest Quarterly Loss in Its 93-Year History
October 25th, 2007Via: Bloomberg:
Merrill Lynch & Co. reported the biggest quarterly loss in its 93-year history after taking $8.4 billion of writedowns, almost double the firm’s forecast three weeks ago.
The writedowns on subprime mortgages, asset-backed bonds and leveraged loans led to a third-quarter loss of $2.24 billion, or $2.82 a share, six times more than Merrill estimated on Oct. 5. Chief Executive Officer Stanley O’Neal said today that the New York-based firm may sell assets to shore up its balance sheet.
Merrill’s stock fell the most in five years, its credit rating was cut and the perceived risk of default on the company’s bonds rose after O’Neal said the firm misjudged the severity of the decline in debt markets since July. Investors who lauded the 56-year-old CEO for chasing higher returns as the biggest underwriter of securities backed by subprime loans now question his management. O’Neal said the firm increased the writedown after a more “conservative” analysis of its holdings.
