Merrill loses $9.83 billion in fourth quarter

Suffering the largest quarterly loss in its 93-year history, the company recorded a $16.7 billion write-down.

Merrill Lynch & Co. Inc. posted the largest quarterly loss in the company’s 93-year history today, as the company recorded a $16.7 billion write-down due to the ongoing fallout from the subprime-mortgage debacle.
The New York-based financial services company said it lost $9.83 billion, or $12.01 per share, in the fourth quarter of 2007, down from the company’s year-ago profit of $235 million, or $2.41 per share.
The write-down included $11.5 billion related to mortgage backed securities and an additional $3.1 billion in adjustments to the firm’s hedge positions.
Merrill also wrote down the value of other mortgages by $949 million, leveraged loans by $126 million and commercial real estate by $230 million.
Additionally, the commercial bank units took an $869 million charge for their investments in mortgages and related securities.
The write-down significantly exceeded the $8 billion to $11 billion loss that the company first projected in October.
The company also made $2.6 billion in credit-valuation adjustments related to hedges on collateralized debt obligations and slashed CDO exposure to $4.8 billion as of Dec. 31, compared with $15.8 billion at the end of the third quarter.
Despite calling the company’s earnings performance for the year “clearly unacceptable,” Merrill Lynch chairman and chief executive John A. Thain said that the majority of its businesses delivered record results in 2007.
Net income in the global wealth management business increased 12%, while net income in its equity markets business rose 23%.
In an effort to resolve the bleeding balance sheet, the company has secured nearly $13 billion in capital investments, mostly from sovereign wealth funds in Singapore, Korea and Kuwait.
Despite the loss, Mr. Thain said that the firm will not sell its stakes in Bloomberg LP, the financial information provider, or BlackRock Inc., the money management firm, according to a report in The New York Times‘ Dealbook.