Thain Takes O’Neals Pain
Originally Published In the News January 17, 2007 1:29 PM
Merrill’s titanic loss does not mean the ship is going down, and John Thain is mobilized the troops to bail out water as fast as he can, although the book value is taking another body blow:
Shares of Wall Street titan Merrill Lynch & Co. fell more than 7% Thursday, retreating after the company reported a fourth-quarter loss of nearly $10 billion that wiped out about a quarter of the firm’s book value in the last year.
At the end of the fourth quarter, Merrill said its book value per share was $29.37, down from $41.35 at the end of 2006.
The firm is the latest financial-services firm to have been humbled by the credit crisis, writing off $11.5 billion of bad debt and derivatives and reporting a fourth-quarter net loss $9.83 billion, or $12.01 a share, for the December quarter. This marked a reversal from the company’s year-earlier profit of $2.35 billion, or $2.41 a share.
Merrill also made $2.6 billion in credit-valuation adjustments related to hedges on CDOs. The loss from continuing operations was $12.57 a share. MarketWatch
Thain has decided against selling Merrill’s stake in Bloomberg or BlackRock, Inc., and capital injections have bolstered its capital position.
Hopefully Thain recognizes that Merrill’s retail brokerage force is a gem, and begins to rebuild trust. It might be one of the smarter moves Thain can make.
Merrill writes off $11.5 bln, swings to $9.8 bln loss
MarketWatch
Comments:
Next entry: Navellier Hits a Speedbump
Previous entry: Judgment Day Approaching For Bond Insurers
