Merrill Lynch Monster Writedowns (MER)

Banking, finance, and taxes

Published: January 17, 2008 7:19 am

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

Are You Still Paying With a Debit Card?

The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.

Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!

Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!

Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.