Merrill reels from $7.9B write-down

The worse-than-expected third-quarter losses raise questions as to the fate of chief executive Stanley O’Neal.
OCT 24, 2007
By  Bloomberg
Losses on subprime mortgages and collateralized debt obligations have taken a larger-than-expected chunk from Merrill Lynch & Co. Inc.’s third quarter earnings. The New York-based firm said that it had a third-quarter net loss of $2.24 billion, or $2.82 per diluted share. That’s down from $3.04 billion, or $3.17, last year. Declines in the firm’s fixed income, currencies and commodities business lopped billions from third-quarter earnings: A $7.9 billion write-down was attributed to collateralized debt obligations and subprime mortgages. The numbers are even more dire than Merrill Lynch’s glum predictions back on Oct. 5, when the firm said it would have a net loss of 50 cents per diluted share and $4.5 billion in write-downs from the sinking fixed-income securities. Merrill Lynch’s losses raise questions as to the fate of chief executive Stanley O’Neal. Confidence in the Mr. O’Neal is “certainly shaken,” an analyst at RCM Capital Management in San Francisco told Bloomberg. Mr. O’Neal has stepped up to face the losses, admitting that he had steered the company into the storm, according to Reuters. “We got it wrong by being overexposed to subprime,” he said on a conference call. “I am accountable for the performance of the firm overall, and my job, our job, the leadership team’s job, is to address where we went wrong,” he added.

Latest News

No succession plan? No worries. Just practice in place
No succession plan? No worries. Just practice in place

While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.

Research highlights growing need for personalized retirement solutions as investors age
Research highlights growing need for personalized retirement solutions as investors age

New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.

Advisor moves: RIA Farther hails Q2 recruiting record, Raymond James nabs $300M team from Edward Jones
Advisor moves: RIA Farther hails Q2 recruiting record, Raymond James nabs $300M team from Edward Jones

With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.

Insured Retirement Institute urges Labor Department to retain annuity safe harbor
Insured Retirement Institute urges Labor Department to retain annuity safe harbor

A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.

LPL Financial sticking to its guns with retaining 90% of Commonwealth's financial advisors
LPL Financial sticking to its guns with retaining 90% of Commonwealth's financial advisors

"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.