Merrill’s O’Neal predicts dismal returns

Merrill Lynch is glum about its third-quarter results, predicting a net loss of 50 cents per diluted share.
The New York-based investment bank also said that it expects $4.5 billion in writedowns related to the falling value of its collateralized debt obligations and subprime mortgages.
The firm’s fixed income, currencies and commodities business will likely feel the pain from the credit disaster this summer.
“While market conditions were extremely difficult and the degree of sustained dislocation unprecedented, we are disappointed in our performance in structured finance and mortgages,” said Stan O’Neal, chairman and CEO, in a statement.
Analysts are also expecting a lot of red ink in Merrill Lynch’s books.
Meredith Whitney, an analyst with CIBC, trimmed her profit estimate to 97 cents per share, down from $2.00, the Associated Press reported.
She also expects that the firm will drop $3 billion from its revenue, outdoing fellow Wall Streeters Goldman Sachs, Lehman, Bear Stearns and Morgan Stanley, the AP said.
The four other firms had dents in their books for the quarter, reflecting falling mortgage debt values and other related losses.