March 27 (Bloomberg) -- Merrill Lynch & Co. and UBS AG probably will report first-quarter losses because of writedowns on the value of debt securities, said Oppenheimer & Co. analyst Meredith Whitney, lowering earlier estimates.

Merrill may post a loss of $3 per share and write down $6 billion of assets, Whitney wrote in a report dated yesterday. Zurich-based UBS will lose $2.75 per share after writing down about $11 billion, she said. Sanford C. Bernstein & Co. also abandoned its prediction of a profit for Merrill today.

``We expect the brokers and banks to take another round of writedowns on their mortgage-related positions,'' said Whitney, who correctly predicted two months in advance that Citigroup Inc. would reduce its dividend to preserve capital.

At least a dozen analysts have reduced profit estimates in the past six weeks for the biggest banks and securities firms on expectations of more writedowns related to the collapse of the subprime mortgage market. Credit losses for banks worldwide already total about $208 billion, according to Bloomberg data.

UBS, down 43 percent this year, rose 1.2 percent to 29.70 francs in Swiss trading. Merrill Lynch fell $2.52, or 5.7 percent, to $41.90 in composite trading on the New York Stock Exchange at 4:09 p.m. Both banks declined yesterday when Whitney lowered her earnings and share-price estimates for the industry and increased her forecast for Citigroup Inc.'s loss. UBS and Merrill report first-quarter earnings next month.

`Disruptive Step'

``We believe Merrill Lynch will go through the disruptive step of true structural reorganization or right sizing that will dominate the bulk of 2008,'' she wrote. Whitney has an ``underperform'' recommendation on shares of Merrill Lynch, the third-biggest U.S. securities firm.

Sanford C. Bernstein also cut Merrill's first-quarter earnings estimate today to a loss of $1.60 per share, from an earlier estimate of $1.30 profit, saying the firm may write down $4.5 billion on collateralized debt obligations. Bernstein estimated Merrill will earn $1.18 per share in 2008, compared with a previous estimate of $4.10.

Whitney had estimated a first-quarter profit of 72 cents per share for UBS. After cutting that prediction, she also reduced her 2008 earnings estimate to 45 cents from $3.70. Whitney rates the Swiss bank's stock ``underperform.''

Whitney said March 25 that Citigroup, the largest U.S. bank, may write down $13.1 billion of assets in the first quarter and its loss in the period could be four times bigger than previously forecast. The bank fell the most in the Dow Jones Industrial Average yesterday and led financials to their biggest retreat in almost two weeks.

To contact the reporters on this story: Poppy Trowbridge in London at ptrowbridge@bloomberg.net; Samar Srivastava in New York at bkeoun@bloomberg.net.

Last Updated: March 27, 2008 16:11 EDT