Merrill Lynch's O'Neal Takes the Hit
The financial giant's CEO took full responsibility for the 94% revenue loss last quarter. Heavy exposure to subprime mortgages was a big problem
This article is for subscribers only.
Merrill Lynch (MER) has sailed directly into the eye of a major financial storm, and the worst may still be ahead for the company and its chief executive Stanley O'Neal.
On Wednesday, Merrill took a writedown of $7.9 billion for the third quarter, by far the largest in its history, to cover losses related to subprime mortgages and risky corporate loans. It was substantially bigger than the $5 billion writedown that the company had warned investors to expect earlier this month. Overall for the quarter, Merrill said it lost $2.3 billion, or $2.85 a share—compared with a profit of $3.05 billion—or $3.17 a share, during the third quarter of 2006. After factoring in the losses, revenues for the quarter fell an astonishing 94% to $577 million.