Business | General
Merrill Lynch plans to cut 2,9oo jobs
Merrill Lynch & Co. posted its third straight quarterly loss on Thursday and said it planned to cut 2,900 more jobs after recording more than $6.5 billion in write-downs on subprime mortgages and other risky assets.
- Reuters
- Published: 00:33 April 19, 2008
New York: Merrill Lynch & Co. posted its third straight quarterly loss on Thursday and said it planned to cut 2,900 more jobs after recording more than $6.5 billion in write-downs on subprime mortgages and other risky assets.
The $2 billion loss was worse than Wall Street analysts' gloomy expectations, but Merrill Lynch's shares rose 4 per cent amid hopes the world's largest brokerage was closer to seeing improvement.
"My sense is, they tried to clean the bad stuff off the shelves, and they hope it's mostly in the trash," said Michael Holland, founder of Holland & Co, which oversees more than $4 billion of assets.
Merrill Lynch's first-quarter net loss to common shareholders was $2.14 billion, or $2.19 per share, compared with a profit of $2.11 billion, or $2.26 a share, in the same quarter last year. The loss from continuing operations was $2.20 per share, wider than the analysts' average forecast of $1.96.
Chief Executive John Thain said the bank is well capitalised, but in a conference call with reporters said Merrill Lynch may look to issue preferred shares similar to JPMorgan Chase's $6 billion sale on Wednesday.
In January and earlier this month, Thain said Merrill Lynch was not looking to raise more capital. Thain said on a conference call with investors on Thursday that the three months ended March 31 were "as difficult a quarter as I've seen in my 30 years on Wall Street."
But Thain also implied that Merrill Lynch may post profits in coming quarters, and told a group of reporters that the month of April was generally better than March.
Thain, who took the reins of the world's largest brokerage in November, is trying to turn the company around as it struggles with the aftermath of bad bets on subprime mortgages and repackaged debt. He is increasing the investment bank's business in emerging markets and cutting costs to help offset losses on assets.
As part of that cost cutting, Merrill said it was cutting head count by 4,000 from year-end 2007 levels; about 1,100 of the reductions took place in the first quarter.
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