Merrill Lynch (MER) Train Wreck

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Merrill Lynch (MER) reported a net loss from continuing operations for the third quarter of $2.3 billion, or $2.85 per diluted share, significantly below net earnings of $2.22 per diluted share for the second quarter of 2007 and $3.14 for the third quarter of 2006.

Third quarter 2007 results reflect significant net write-downs and losses attributable to Merrill Lynchs Fixed Income, Currencies & Commodities business, including write-downs of $7.9 billion across CDOs and U.S. sub-prime mortgages, which are significantly greater than the incremental $4.5 billion write-down Merrill Lynch disclosed at the time of its earnings pre-release.

These write-downs and losses were partially offset by strong revenues in Global Wealth Management, Equity Markets, and Investment Banking, particularly in regions outside of the U.S.

Third quarter 2007 total net revenues of $577 million decreased 94% from $9.8 billion in the prior-year period and were down 94% from $9.7 billion in the second quarter of 2007. Merrill Lynchs third quarter 2007 pre-tax net loss was $3.5 billion.

Douglas A. McIntyre