Record losses predicted for Merrill, UBS

The first-quarter hits will be due to write-downs on the value of debt securities, said Oppenheimer analyst Meredith Whitney.

Merrill Lynch & Co. Inc. and UBS AG will probably record losses in the first quarter due to write-downs on the value of debt securities, said Oppenheimer & Co. analyst Meredith Whitney.
Merrill may post a loss of $3 per share and write down $6 million of assets, Ms. Whitney said in a report dated yesterday.
Additionally, she predicted that Zurich, Switzerland-based UBS would post a loss of $2.75 per share after writing down about $11 billion.
“We expect the brokers and banks to take another round of write-downs on their mortgage-related positions,” said Ms. Whitney, who correctly predicted two months in advance that Citigroup Inc. would reduce its dividend to preserve capital, according to Bloomberg.
UBS and Merrill report first-quarter earnings next month.
Ms. Whitney predicted that Merrill will go through a “disruptive step of true structural reorganization or right sizing that will dominate the bulk of 2008.
She has an “underperform” recommendation on shares of New York-based Merrill.
Ms. Whitney also estimated a first-quarter profit of 72 cents per share for UBS.
After cutting that prediction, she also reduced her 2008 earnings estimate to 45 cents from $3.70 and gave the bank’s stock an “underperform” rating.
Oppenheimer & Co. is based in New York.