Merrill Lynch posts steep first-quarter loss on write-downs

Merrill Lynch & Co., the world's largest brokerage, on Thursday said it would cut another 3,000 jobs after more than $6.5 billion of fresh write-downs pushed it to a loss for the first quarter.

It marks the third straight quarterly loss for Merrill amid a global credit crisis that began last summer. Banks and brokerages have racked up nearly $200 billion of write-downs to date, with more feared to come.

John Thain, hired as chief executive four months ago to clean up the firm's books, cautioned that things were unlikely to improve in the next couple quarters. The New York-based brokerage lost about $2 billion during the most recent quarter, and has now written off about $29 billion worth of risky asset-backed securities and leveraged loans.

"This was about as difficult a quarter as I've seen in my 30 years on Wall Street," Thain told analysts during a conference call. "We are planning for a slower and more difficult next couple of months and probably next couple of quarters, but are also hopeful for our full year 2008 results."

His comments echo those of rival investment banking chiefs, who in recent days have said the worst of the crisis is over — but that a resurgence might not happen until the second half of the year. Thain also said that April is so far shaping up to be a better month for the brokerage compared to previous months. Merrill Lynch lost $2.14 billion, or $2.19 per share, after paying preferred dividends, during the first quarter. This was well below the profit of $2.11 billion, or $2.26 per share, a year earlier. Total revenue fell to $2.93 billion from $9.6 billion a year earlier.

Results missed Wall Street projections for a loss of $1.99 per share on $3.7 billion of revenue, according to analysts polled by Thomson Financial.

"Merrill Lynch's and other investment banks' write downs are a stark reminder that we are not out of the woods yet in terms of the credit crisis," said Octavio Marenzi, head of financial consultancy Celent LP. "There is more pain to come and pressures on earnings are going to continue."