quadburn
10-25-2007, 11:21 AM
Looks like Merrill Lynch's loss was Sugarbush's gain. From today's Wall Street Journal:
Merrill Takes $8.4 Billion Credit Hit
By RANDALL SMITH and JED HOROWITZ
October 25, 2007; Page A1
After presiding over one of the biggest losses in Wall Street history, Merrill Lynch & Co. Chief Executive Stan O'Neal finds himself with a weakened power base as he fends off charges that he let the firm's exposure to risky mortgages get out of hand.
Merrill said yesterday it took a $8.4 billion hit in the third quarter from revaluing bonds backed by mortgages and taking other write-downs. That was far higher than the $5 billion hit Merrill estimated just two and a half weeks ago -- a surprise that led the firm's stock price to fall 5.8% as its credit rating was downgraded.
Overall, Merrill recorded a $2.24 billion loss for the quarter, making it the only one of Wall Street's five biggest investment banks to end the period in the red. Ratings firm Standard & Poor's described the write-downs as "staggering" and blamed "management miscues."
Merrill Lynch's board met on Sunday and Monday to preview the results and grilled Mr. O'Neal and top executives. The meeting was "definitely tense and very testy," says a person familiar with it.
Mr. O'Neal's job doesn't appear to be in immediate jeopardy, this person said. But the write-downs -- which amounted to about one-eighth of Merrill's total value at the end of the quarter -- emboldened critics among Merrill's alumni, some of whom had already been toying with the idea of an activist campaign to unseat Mr. O'Neal. A campaign by Morgan Stanley alumni led to the June 2005 ouster of that company's then-CEO, Philip Purcell.
"This was a great firm with a great franchise and it is not being led well," said Win Smith, the son of one of the firm's founding partners, who lost out to Mr. O'Neal in a horse race for the top job. "It is in need of the right leadership for the future."
Merrill Takes $8.4 Billion Credit Hit
By RANDALL SMITH and JED HOROWITZ
October 25, 2007; Page A1
After presiding over one of the biggest losses in Wall Street history, Merrill Lynch & Co. Chief Executive Stan O'Neal finds himself with a weakened power base as he fends off charges that he let the firm's exposure to risky mortgages get out of hand.
Merrill said yesterday it took a $8.4 billion hit in the third quarter from revaluing bonds backed by mortgages and taking other write-downs. That was far higher than the $5 billion hit Merrill estimated just two and a half weeks ago -- a surprise that led the firm's stock price to fall 5.8% as its credit rating was downgraded.
Overall, Merrill recorded a $2.24 billion loss for the quarter, making it the only one of Wall Street's five biggest investment banks to end the period in the red. Ratings firm Standard & Poor's described the write-downs as "staggering" and blamed "management miscues."
Merrill Lynch's board met on Sunday and Monday to preview the results and grilled Mr. O'Neal and top executives. The meeting was "definitely tense and very testy," says a person familiar with it.
Mr. O'Neal's job doesn't appear to be in immediate jeopardy, this person said. But the write-downs -- which amounted to about one-eighth of Merrill's total value at the end of the quarter -- emboldened critics among Merrill's alumni, some of whom had already been toying with the idea of an activist campaign to unseat Mr. O'Neal. A campaign by Morgan Stanley alumni led to the June 2005 ouster of that company's then-CEO, Philip Purcell.
"This was a great firm with a great franchise and it is not being led well," said Win Smith, the son of one of the firm's founding partners, who lost out to Mr. O'Neal in a horse race for the top job. "It is in need of the right leadership for the future."