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Merrill Lynch Facing Tough Times

Jul 23, 2008
In the recent world of write offs and huge company losses two business giants are saying goodbye. Merrill Lynch and Bloomberg, companies that are worth more than billiions, will no longer be connected as far as stocks are concerned. Merril Lynch has decided to sell its 20 percent worth of stocks in Bloomberg back to the company.

With their relationship first existing in 1985 where Merrill Lynch brought %30 percent of the company to solidify their relationship now is totally nonexistent. First signs existed earlier in July when the company sold approximately 30 percent of the Bloomberg holdings to Bloomberg itself but still stated that they will have a business partnership.

Downsizing 101
With many companies across the board feeling some setbacks due to our countries economic situation, Merrill Lynch is no different. Recent reports have stated that the company itself has feel $4.6 billion dollars behind profit within the second quarter. This was pretty much due to the fact that the mortgage industry has been going through a heavy recession. The loss in $4.6 billion dollars is in effect related to $9.4 billion dollars of write-offs the company has made due to mortgage holdings, and credit related instruments.

In a recent conference call, chief executive John Thain stated that despite the company going through some tough times within the credit and mortgage industries that its main business was holding up and still profitable. He went on to discuss the fact that because of the current situations within certain markets, that the company was trying to clean house and reduce the companies risky assets.

Who is Merrill Lynch?
Merrill Lynch whose firms headquarters is located in New York City is mainly an investment company that provides many services related to wealth management, asset management, insurance, and banking.

The company itself was founded on January 6, 1914 but wasn't until 1915 that the company became officially known as Merrill, Lynch & Co. They initially held their offices at 7 Wall Street in New York City. Through smart investments, one right after another, the company eventually became so successful that it became a big board member of the New York Stock Exchange in 1958. By this time, the company was known as Merril Lynch, Pierce, Fenner & Smith.

It wasn't until 1971 that the company first went public and has since became a worldwide company with offices being held in more than 40 countries. Some estimates state the company hold over several trillion dollars in clients assets.

Within recent history, the company itself has been facing rough times. On November 1, 2007 the company released their CEO Stanley O'Neal after investors were not pleased with the way he handled the mortgage woes within 2007, and for discussing certain company disclosed information publicly without the consent of the companies board of directors. John Thain, then CEO of the New York Stock Exchange eventually succeeded him.

As far as the balance sheet, good grace hasn't been on the companies side. With quarter after quarter, the company reporting losses, Merrill Lynch within the last year or so has become synonymous with reporting losses, most notably:
- $9.83 billion dollar 2008 Fourth Quarter Loss and,
- $1.97 billion dollar 2008 First Quarter Loss

In recent weeks, the theme within the finance world has been one of despair and cutting unprofitable ties. From IndyMac, to the woes of Fannie Mae and Freddy Mac, Merrill Lynch is just another company facing turmoil within this economic recession under the leadership of the ill equipped Bush administration.
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