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Merrill 4Q drops sharply
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January 23, 2002: 11:59 a.m. ET
Brokerage posts net loss for quarter, meets forecasts on operating profit.
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NEW YORK (CNN/Money) - Merrill Lynch & Co. reported its first quarterly loss in three years Wednesday, reflecting the impact of a whopping one-time charge taken to cut thousands of jobs and otherwise trim down in reaction to slumping equity markets and a global recession.
The No. 1 U.S. brokerage firm reported a net loss of $1.3 billion, or $1.51 a share, its first net loss since the third quarter of 1998, compared with a profit of $422 million, or 49 cents a share, a year earlier.
The results included a $2.2 billion pre-tax charge taken for about 9,000 job cuts and other efforts to restructure the firm. Throughout 2001, its revenue was hit by a drop-off in investment activity, driven by falling stock prices and a recession in the U.S. economy that some economists think began in March 2001.
"Although equity markets showed signs of stabilizing, the fourth quarter operating environment remained challenging," CEO David Komansky and president Stan O'Neal said in a statement.
"While the pace of economic recovery remains uncertain, we are confident that the actions we are taking will yield substantial efficiencies, improve profit margins and enhance our competitive position globally," the executives added.
Excluding the restructuring charge, but including charges related to recovery from the Sept. 11 terror attacks, Merrill earned $461 million, or 48 cents a share, in the quarter ended Dec. 28. That was a significant drop-off from the $475 million, or 93 cents a share, it earned a year earlier, but it met analysts' average forecast for a profit of 48 cents, according to earnings tracker First Call.
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Fourth-quarter revenue fell to $4.75 billion from $5.14 billion a year earlier, led by a 23 percent drop in commissions and a 13 percent drop in asset management revenue.
A slump in merger and acquisition activity was reflected in a 20 percent drop in underwriting revenue and a 52 percent drop in strategic advisory revenue.
"It looks like, in a lot of businesses, [Merrill has] reached a bottom, Prudential Securities analyst Dave Trone told Reuters.
After falling Tuesday, Merrill (MER: down $0.42 to $54.59, Research, Estimates) shares fell again on Wednesday. 
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