Merrill Lynch Posts Wide Loss

NEW YORK -- Merrill Lynch & Co. swung to an unexpectedly deep loss in the third quarter on the back of a $7.9 billion writedown in its fixed-income trading business, a hit that exceeded the Wall Street giant's net earnings for all of 2006.

Merrill posted a net loss of $2.24 billion, or $2.82 a share, well beyond the damage the bank forecast in an Oct. 5 earnings warning. At that time, it expected a loss of up to 50 cents a share after writing down $4.5 billion of subprime mortgages and collateralized debt obligations. The actual loss on those positions came in $3.4 billion higher after market values were re-examined and more conservative assumptions were applied in the intervening two and a half weeks, Merrill said.

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