Sept. 26 (Bloomberg) -- Merrill Lynch & Co., the third biggest U.S. securities firm, may record losses of as much as $4 billion on fixed-income assets, resulting in the lowest quarterly earnings in almost six years, Goldman Sachs Group Inc. analyst William Tanona said.

Tanona cut his third-quarter earnings estimate to 15 cents a share from $1.95. For the full year, he expects earnings of $6.75 a share, or 25 percent less than his previous prediction. Merrill fell as much as 3 percent in New York trading before rebounding.

The losses would exceed those reported last week by Goldman, Morgan Stanley, Lehman Brothers Holdings Inc. and Bear Stearns Cos. New York-based Merrill may have to write down the value of mortgages, corporate loans and collateralized debt obligations, Tanona wrote in a report to clients today.

Merrill ``appears to be caught in the crosshairs,'' Tanona said. The firm's third quarter ends this month.

Jessica Oppenheim, a Merrill Lynch spokeswoman, declined to comment.

Merrill shares fell 37 cents to $71.75 at 4:02 p.m. in New York Stock Exchange composite trading. The stock has declined 23 percent this year.

All five of the biggest U.S. brokerage firms have grappled with declines in the value of asset-backed securities and corporate loans on their books as surging losses on subprime home loans made investors leery of risky investments.

Competing Firms

Bear Stearns said profit in the fiscal third quarter ended Aug. 31 fell by 61 percent from a year earlier, while Lehman's dropped by 3 percent and Morgan Stanley's profit from operations decreased by 7 percent. Goldman's net income increased by 79 percent even after recording a $1.5 billion loss on leveraged loans.

Merrill may report third-quarter net income of $208.9 million, Tanona estimated. Such a result would represent a 93 percent decline from the $3.05 billion reported for the third quarter of 2006.

Credit Suisse analyst Susan Roth Katzke today cut her estimate of Merrill's third-quarter earnings for the second time in a week. She now expects $1.25 a share, down from a Sept. 21 estimate of $1.60 and an earlier forecast of $1.87.

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: September 26, 2007 16:20 EDT