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Merrill Lynch Sees Record Loss Of Almost $10 Billion

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By JOE BEL BRUNO, The Associated Press

Published: January 18, 2008

NEW YORK - Merrill Lynch & Co. on Thursday recorded its biggest quarterly loss since being founded 94 years ago after the world's largest brokerage took almost $15 billion worth of write-downs from bad subprime mortgage bets.

The fourth-quarter loss was just short of $10 billion as Merrill Lynch became the latest Wall Street bank bloodied by the ongoing credit crisis. Its massive write-offs came largely from the shrinking value of securities backed by mortgages, which have soured as borrowers are unable to repay them on time.
Merrill Lynch joins rival Wall Street investment houses Morgan Stanley and Bear Stearns Cos. in posting losses in the last three months of fiscal 2007. Citigroup, the nation's largest bank, reported on Tuesday a quarterly loss of almost $10 billion, the largest in its 196-year history.

John Thain, the new chief executive officer at Merrill Lynch, said he thinks this will be the bulk of the company's write-downs from its subprime mortgage exposure. But he would not speculate about what 2008 might hold in store in other areas.

"I don't think you should anticipate any further problems of this magnitude," Thain said in a conference call with reporters. "There would have to be something incredibly bad out there to have this happen again, and our whole goals is to get 2007 behind us."

The New York-based brokerage marked down $11.5 billion from mortgage-backed securities and an additional $3.1 billion in adjustments to hedge positions on them.

That caused Merrill Lynch to post a net loss after preferred dividends of $9.91 billion, or $12.01 per share, compared with a profit of $2.3 billion, or $2.41 per share, a year earlier. Merrill Lynch shares tumbled $3.50, or 6.3 percent, to $51.60 in Thursday morning trading. Share prices have fallen almost 50 percent since their high of $98.68 last year, wiping out some $40 billion in shareholder value along the way.

After joining Merrill Lynch last month, Thain pledged to clear the brokerage's books and shore up its capital base to better position it amid the credit market turmoil. He replaced Stan O'Neal.

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