Merrill Lynch managed to beat all expectations when it comes to the size of it’s write downs. Wachovia’s analysts estimated $5 billion, Charlie Gasparino had put the number at $6 billion, we had predicted a bit higher.
As it turns out, things are far worse than expected. Merrill posted a $4.9 billion second-quarter loss, it’s fourth straight quarterly loss. (This prompted the joke around DealBreaker HQ that four quarters equals a hole.) It is selling nearly $8 billion of assets in a scramble to raise capital. Write downs for the quarter amounted to $9.7 billion.
Many investors had bet that Merrill would show much better numbers, perhaps demonstrating that the brokerages were making a comeback. This bullish speculation, in part built off of good news coming out of Wells Fargo and JP Morgan, pushed Merrill’s share price up nearly 40% from where it traded just a few days ago.
Update: Moody’s downgrades Merrill’s debt from A1 to A2.
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pwnd
Getting out all the bad news this quarter
( DJ ) 07/17 04:32PM DJ US Invest Bks Return To Borrowing From Fed Discount Window
( DJ ) 07/17 04:30PM *DJ US Fed Total Discount Window Borrowings Wed $16.19 Bln
( DJ ) 07/17 04:30PM *DJ Discount Window Avg Daily Borrowings Wk Of July 16 $14.30B
( DJ ) 07/17 04:30PM *DJ Primary Credit Borrowings Wed $16.10B; Daily Avg $13.92B
moody’s just came in with a down grade…
Here’s a doozy on teh “strength and stability of the firm’s core franchise”:
“Net revenues for the second quarter were $7.5 billion, excluding these net losses, credit valuation adjustments and a $91 million net benefit related to credit spread widening on Merrill Lynch’s long-term debt liabilities. On a comparable basis, these revenues were down 21 percent from the prior-year period but up slightly from the first quarter of 2008, reflecting the strength and stability of the firm’s core franchise.”
Net revenues are off 21%! Look how strong we are!
“fourth straight in a row” redundant
The phrase “it’s fourth straight quarterly loss in a row.” is redundant.
@4:41 yeah. that’s what Stan said when they wrote down $7.9B in 3Q07.
“wait til next quarter”
Communication and technology costs were $566 million, up 17 percent, due primarily to costs related to ongoing technology investments and system development initiatives, as well as higher market data information costs.
orly
that’s going to leave a mark…
Why does Mother Merrill get put down?
mother merrill is a cheap whore who lost her looks long ago. “will suck d*ck for coke”
Traders don’t lose money. Models do.
What part of ‘kitchen sink’ are you people failing to understand ?
MER has sadly turned into a train-wreck. Very sad, their FX was pretty good. Oh well, thanks for coming out … we have lovely parting gifts lads.
Bucket Shop.
MER is a retail firm and investment banking distribution operation.
they’ll get rid of all the other crap that they’re not good at. as they should.
@4:41, 7:15
Is that the same ‘kitchen sink’ that we’ve been hearing about for quarters of successive write downs or, as it seems, do they have a whole warehouse of them?
the days of copycat wall street are over.
everyone returns to their roots, or gets blown out.
MER will go back to retail…
OK, guest@9:17.
I understand what you’re saying. Can anyone tell me what Citi’s roots are?
Best…
dantheman
Citi has deep roots.
The Bank of New York was chartered by New York State on June 16, 1812 with $2 million of capital. Serving a group of New York merchants, the bank opened for business on September 14 of that year, and Samuel Osgood was elected as the first President of the company. The company’s name was changed to The National City Bank of New York in 1865 after the joining the new U.S. national banking system, and it became the largest American bank by 1895. It became the first contributor to the Federal Reserve Bank of New York in 1913, and the following year it inaugurated the first overseas branch of a U.S. bank in Buenos Aires. The 1918 purchase of U.S. overseas bank International Banking Corporation helped it become the first American bank to surpass $1 billion in assets, and it became the largest commercial bank in the world in 1929. As it grew, the bank became a leading innovator in financial services, becoming the first major U.S. bank to offer compound interest on savings (1921); unsecured personal loans (1928); customer checking accounts (1936) and the negotiable certificate of deposit (1961).
Citi changed its name to The First National City Bank of New York in 1955, which was shortened to First National City Bank on the 150th anniversary of the company’s foundation in 1962. The company organically entered the leasing and credit card sectors, and its introduction of USD certificates of deposit in London marked the first new negotiable instrument in market since 1888. Later to become MasterCard, the bank introduced its First National City Charge Service credit card – popularly known as the “Everything card” – in 1967.
During the mid-1970s, under the leadership of CEO Walter Wriston, First National City Bank (and its holding company First National City Corporation) was renamed as Citibank, N.A. (and Citicorp, respectively).
citi is retail bank and a commercial lender.
they were the first bank to issue “checks” to regular old retail customers.
they’re not a fucking investment bank.
lol
I love that this is “THE kitchen sink quarter” becuase i thought last quarter (post the BSC meltdown – the last time the financials saw a rally like they did last 2 day) was the “final kitchen sink quarter”. At that point, all the pundits declared that we had bottomed and it was time to buy, buy, buy again. What bull shit. Look at the ABX index in most cases the tranches are at least 50% below where they were on the day BSC melted down. Some of the tranches are 90% below where they were on the day BSC melted down.
Serioulsy how can they say that this name is oversold? I tell you MER must have one hell of a garborator.
Let’s see, Merrill merges with Lehman = ?
Every single retard overpaid MD at Merrill has to forgo of thier bonuces this year! They can get their ass fired otherwise. Choice is theirs!
@6:09 Speaking of a retard:
Retard is a noun, but used as an adjective.
Forego is spelled incorrectly. It is also used inappropriately.
Tenses are confused: ‘Every single’ implies the singular case, whereas ‘their bonuces’ is plural.
‘of’ before ‘their bonuces’ doesn’t make sense.
‘Bonuces’ is spelled incorrectly.
They may be overpaid, but at least their grammar will at least be at a third grade level.
Cnote also forgot to mention:
they is plural, their ass is is singular
Are we supposed to believe these are some sort of magic “retard MD” who all share a single ass?