Monday, January 28, 2008

Merrill's loss for the full year 2007

The five biggest U.S. securities firms, which also include Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc., reported a net total of $10.2 billion in losses for the year 2007.

The loss dropped Merrill's ``book value'' -- what's left after assets are subtracted from liabilities -- to $29.37 per share, down from $41.35 at the end of last year. The share price is about 1.7 times book value with the possibility to go to about 1.5 times book value, closer to where peers are priced.

The company's full-year loss was $7.78 billion compared with record net income of $11.6 billion at Goldman, the biggest U.S. securities firm by market value, and earnings of $3.2 billion posted by Morgan Stanley, the industry's No. 2 firm.

Merrill, the third-biggest U.S. securities firm, fell 42 percent last year in NYSE trading, the third-worst performance among the 12 stocks tracked by the Amex Securities Broker/Dealer Index. Goldman, which profited by betting on a decline in prices for mortgage securities, gained 7.9 percent in the same period.

Merrill, whose market value was greater than Goldman as recently as 2006, is now worth half as much.

Merrill eliminated about 1,000 jobs in the fourth quarter of 2007, most of them at San Jose, California-based First Franklin.

Merrill's 1989 net loss of $213 million, under then-CEO William Schreyer, was the first since the firm went public in 1971. That loss works out to about $350 million in 2007 dollars.

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