Merrill to Cut 9,000 Jobs, Take $2.2B Charge
NEW YORK – Merrill Lynch and Co. Inc., the No. 1 U.S. brokerage, on Wednesday said it will cut about 9,000 jobs, or 16 percent of its work force, and take a $2.2 billion charge as it wrestles to rein in costs and eke out profits in the slack U.S. economy.
The New York-based firm, like other brokerages, is fighting a stock market slump and a sharp drop in revenues from advising companies on mergers and new stock offerings. The Sept. 11 attacks on the United States that shut down stock markets for four days further damaged the economy and created widespread uncertainty on Wall Street.
Merrill cut 6,100 jobs last year and in October offered severance packages, potentially worth more than a year's salary, to all of its employees in an effort to reduce its work force and cut costs.
On Wednesday the company forecast lower fourth-quarter earnings of 48 cents to 50 cents a share, excluding the charge. Wall Street had expected earnings of 41 cents to 58 cents a share, with a consensus estimate of 48 cents, according to market research firm Thomson Financial/First Call. Merrill earned 93 cents a share in the year-earlier quarter.
Merrill said it expects fourth-quarter revenues to be down about 8 percent from the third quarter, mostly because of slack bond trading revenues and less investment banking business.
It said the steps to cut jobs and costs should save it about $1.4 billion annually. Merrill employed about 57,000 people around the world at the end of the fourth quarter.
``Based on a detailed review of all our businesses over the past three months, and our current market outlook, we are moving aggressively to make Merrill Lynch leaner, more competitive, more focused than ever on serving clients in our chosen markets around the world,'' David Komansky, Merrill chairman and chief executive, and Stan O'Neal, president and chief operating officer, said in a joint statement.
About $1.2 billion of the charge relates to severance, about $500 million relates to consolidating and closing some offices, and about $300 million relates to the write-down of technology assets, Merrill said.