Merrill Lynch & Co. today reported a net loss of US$4.65 billion, or US$4.97 a share, in the second quarter. That contrasted with net income of US$2.14 billion, or US$2.24 a share, in the year ago period.

The latest results included a pretax restructuring charge of $445 million related to layoffs.

It was the firm’s fourth consecutive quarterly loss.

Net revenues were negative US$2.1 billion, compared with positive US$9.5 billion in the prior-year period. The revenue decline was driven by net losses totaling US$3.5 billion related to U.S. super senior ABS CDOs and credit valuation adjustments of negative US$2.9 billion related to hedges with financial guarantors.

Other significant net losses included US$1.7 billion in the investment portfolio of Merrill Lynch’s U.S. banks, as well as US$1.3 billion from certain residential mortgage exposures.

Merrill said the net loss from continuing operations for the second quarter of 2008 of US$4.6 billion, compared to net earnings of US$2 billion for the second quarter of 2007.

Second quarter 2008 results included a restructuring charge of US$445 million pre-tax (US$286 million after-tax) arising from headcount reductions completed during the quarter.


The net loss from continuing operations for the first six months of 2008 was US$6.6 billion, compared with net earnings from continuing operations of US$4 billion in the prior-year period. First half 2008 net revenues were US$818 million compared to US$19.1 billion in the prior-year period.

“Our core franchise continues to perform well despite the extremely challenging market environment,” said John Thain, chairman and chief executive officer. “Against this backdrop, we increased our excess liquidity pool to a record level of US$92 billion and significantly reduced our exposures in key asset classes. Importantly, with the transactions we announced today, we are bolstering our capital base and continue to move forward on our risk management and strategic growth initiatives.”

Earlier today, Merrill completed the sale of its 20% ownership stake in Bloomberg, L.P. to Bloomberg Inc., for US$4.425 billion, and as part of this transaction has entered into a long-term service agreement. Merrill Lynch is also in negotiations and has signed a non-binding letter of intent to sell a controlling interest in Financial Data Services, Inc.