Merrill Lynch Monster Writedowns (MER)

Merrill Lynch (NYSE: MER) has issued its loss for the quarter at -$12.57 EPS for Q4, -$10.73 EPS for all of 2007.  The total loss in dollars was listed as $8.6 Billion for the quarter.

The net writedowns for all the mortgage, lending, and derivative mess in Q4 were $14.1 Billion.  Of that $14.1 Billion, 11.5B was from ABS & CDO’s and another $2.6 from hedges with financial guarantors on ABS & CDO’s.  Wall Street was somewhere in a 412 Billion to $15 Billion range, so this is toward the higher-end of that range.  The good news for shareholders is that yesterday the number that was being thrown around by some trading floors was as much as $20 Billion after it was all said and done.

At the end of Q4, its book value per share was listed as $29.37 (down from $41.35 at the end of 2006). Including the impact of the equity and equity-related transactions, Merrill Lynch’s pro forma book value per share would be $30.30 at the end of 2007.

John Thain will have an interview on CNBC at 9:15 AM this morning.  Here are Thain’s comments from the press release:

• "While the firm’s earnings performance for the year is clearly unacceptable, over the last few weeks we have substantially strengthened the firm’s liquidity and balance sheet…. In addition, a great majority of Merrill Lynch’s key businesses delivered record results in 2007, and as I look ahead to 2008, the firm is intensely focused on continuing this momentum and delivering growth and increased profitability for our shareholders and employees.”

Shares closed at $55.09 yesterday and the early pre-market indications are around $54.00.  We’d caution on this number at there are more than two hours to the open of trading and this number may be higher or lower by the time the market opens depending on Thain’s stance and on outside news.

Jon C. Ogg
January 17, 2008