Merrill Lynch posts big loss, to cut 4,000 jobs

NEW YORK (Reuters) — Merrill Lynch (MER) on Thursday posted a nearly $2 billion first-quarter loss, and said it plans to cut 4,000 jobs after suffering more than $6 billion fresh write-downs pushed it to a loss for the first quarter.

After the loss, Moody's Investors Service said it may cut its long-term A1 rating on Merrill Lynch, citing deteriorating conditions in the mortgage market and more expected losses.

The job cuts cover about 10% of staff at the world's largest brokerage, excluding financial advisers and investment associates. Merrill Lynch said the job cuts will be targeted in markets and investment banking operations and in support areas. The company said it ended March with 63,100 employees overall.

Merrill Lynch's quarterly net loss was $1.96 billion, and compared with a profit of $2.16 billion a year earlier.

Including preferred stock dividends, the loss was $2.14 billion, or $2.19 a share, and compared with a profit of $2.11 billion, or $2.26 a share, a year earlier.

The loss from continuing operations was $2.20 a share. On that basis, analysts on average expected a loss of $1.96 a share, according to Reuters Estimates.

Net revenue declined 69% to $2.93 billion. Analysts expected revenue of $3.35 billion.

Chief Executive John Thain said that despite the loss, Merrill Lynch remains "well-capitalized."

Merrill Lynch had already recorded more than $24 billion of write-downs in prior quarters. These spurred it to raise more than $12 billion of new capital. Thain said this month he did not expect to raise more capital in the foreseeable future.

Results reflected a $1.5 billion write-down related to collateralized debt obligations tied to asset-backed securities, and a $3 billion write-down linked mainly to so-called "super-senior" CDOs tied to asset-backed securities.

Merrill Lynch said it also suffered write-downs tied to corporate loans for leveraged buyouts, and to residential mortgages.

The losses were offset by a $2.1 billion benefit related to widening credit spreads.

Merrill Lynch's shares were down 16.4% between the end of 2007 and Wednesday's close, compared with a roughly 25% decline for the broker-dealer sector as measured by the Amex securities broker-dealer index.

Contributing: Associated Press

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