Monday, July 28, 2008

Merrill Write-Downs to Date...

I searched all over the web, but was unable to find a cumulative total of write-downs to date for Merrill Lynch. Below is my attempt to piece together what I calculated at ~$40B in write-downs to date. For comparison's sake, Merrill's equity market cap at today's close was ~$24B...

If someone finds / knows of different figures than those that I used, please send them along...

October 5th, 2007: $5B: Merrill Lynch's chairman and chief executive, Stan O'Neal, said market conditions have shown improvement recently and are returning to more normal levels.

October 24th, 2007: Revised to $7.9B: "In light of difficult credit markets and additional analysis by management during our quarter-end closing process, we re-examined our remaining CDO positions with more conservative assumptions," he said in a statement. "The result is a larger write-down of these assets than initially anticipated."

January 17th, 2008: Another $11.5B: Calling the results "clearly unacceptable," newly minted Chief Executive John Thain said he was nevertheless encouraged by the company's recent steps to strengthen its cash position. "Over the last few weeks we have substantially strengthened the firm's liquidity and balance sheet," Thain said

April 17th, 2008: Throw in $6.6B: "Despite this quarter's loss, Merrill Lynch's underlying businesses produced solid results in a difficult market environment," Chairman and CEO John Thain said in a company statement.

July 18th, 2008: What’s another $9.4B: "So the strength of the core franchise, very liquid and reducing risky assets, and shrinking our balance sheet. Next point I want to make is that in spite of this loss for the quarter we likely have in our last two quarters more then replaced the capital that we’ve lost. So at the end of the first quarter we replaced the capital that we lost, at the end of the year we more then replaced the capital that we lost", Chairman and CEO John Thain in Merrill Lynch's earnings call transcript.

July 28th, 2008: And another $5.7B: John A. Thain, who has struggled to turn Merrill around since becoming chief executive in December, said the sale of the worrisome investments, known as collateralized debt obligations, or C.D.O.’s, was “a significant milestone in our risk reduction efforts.”

Update (apparently I have too much time on my hands) I present... The TUMBLING BULL!


  1. According to Bloomberg, the exact figures would be 46.1 Bil of writedowns & credit losses, and 22.1 Bil of capital raised. Thanks for this nice blog. NG

  2. Jake you absolutely rock! I just loved this story. In case people ever wonder where all the money went that Merrill was making, 50% of the profits went into commissions for the brokers. This company was in trouble a long time ago.

    Clark Jenkins

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