Make it four consecutive quarters of red ink for Merrill Lynch, which reported Q2 earnings last Thursday. Did I say earnings? I meant losses, which have piled up to $19 billion over the past year. It took the investment firm four years to earn that much money--and only one to watch it go poof!
Write-downs for impaired assets came to almost $10 billion for the quarter, or over $40 billion since a year ago. To raise cash, Merrill sold its 20% stake in Bloomberg LP for $4.4 billion and its controlling interest in Financial Data Services for $3.5 billion. For now it is retaining its 49% stake in asset manager BlackRock Inc., but expect that one to go by the end of 2008. Merrill must liquidate, as it is simply no longer able to raise new capital. The window is closed.
Reporting the same day, executives at the nation's largest investment bank, Citigroup, were doing fist pumps. They lost only half as much as Merrill and only half as much as they had the quarter before. Progress! Still, over $7 billion in write-downs were taken, bringing the overall total to $40 billion since the credit meltdown began last August. If this keeps going, we'll soon be talking about some serious money.
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