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Thursday, 18 October, 2001, 15:54 GMT 16:54 UK
Merrill Lynch profits slashed by half
Merrill Lynch, has posted its worst quarterly profits since 1998 as a sluggish US economy and the 11 September attacks depressed profits at America's largest brokerage firm.

The company, whose headquarters were damaged in last month's terror attacks, saw business slide a investors shunned shares during the worst period for US stocks since the Great Depression.

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During the July-September period, investors saw US stock values continue to plummet as firm after firm reported or warned of lower profits.

In addition, the attacks on the World Trade Center, which left as many as 6,000 dead or missing, halted trading for four days and hampered the operations of many financial services firms.

Over the July-to-September period, Merrill Lynch earned $422m (292m), a decline of 53% on the $885m (613m) reported for the same period a year ago.

"While our results are reasonable given a business environment that was deteriorating even before the terrorist attacks... we are not satisfied with them," a joint statement issued by chief executive David H Komansky and president Stan O'Neal said.

"We are accelerating actions throughout all of our businesses to improve profit margins."

Job cuts?

In Thursday's statement, the firm claimed nearly 66,000 employees worldwide, a decline of about 6,100 since the end of last year.

On Wednesday, speculation swirled markets that Merrill Lynch would cut an additional 10,000 jobs, as it continued to struggle with boosting its bottom line.

The firm responded by saying that no firm decisions had been made on any overall job cut figure.

"While the pace of this review is accelerating, decisions will be made business by business, and we have no overall company-wide headcount reduction target," the company said on Wednesday.

Cost cutting

Merrill Lynch said it is reviewing all of its businesses amid a "deteriorating revenue environment" to ensure its operations were proportionate.

Goldman Sachs, JP Morgan Chase and Morgan Stanley, along with other financial services firms, have looked at reductions in employee numbers as a way of cutting costs and remaining competitive.

Bear Stearns on Thursday said it was eliminating 800 jobs, or 7% of its workforce, with most of the cuts coming in its US operations.

But a company spokeswoman cautioned that further job losses are unlikely given the company is at the end of its 18-month long cost-cutting programme.

Bear Stearns employs about 11,150 people worldwide.

Leaving downtown

Merrill Lynch, more so than some of its competitors such as Lehman Brothers and Bear Stearns, relies heavily on stock trades for business, and said it saw trading revenues fall 35% during the quarter.

But the firm also saw declines in profits derived from sponsoring stock floats and merger deals.

The firm's underwriting profits fell 8% to $543m (376m), as corporations proved reluctant to sell stock amid falling share prices.

Merrill Lynch earlier this month said it would sell a midtown office building it is building to competitor Lehman Brothers, throwing into doubt a commitment to stay in Manhattan.

At the time Merrill Lynch said it was seeking to maintain "a large presence" in the financial district where it occupies about 6 million square feet in the World Financial Center, adjacent to the area where the World Trade Center towers once stood.

But on Thursday, citing people familiar with the firm's plans, the Wall Street Journal reported that Merrill Lynch is putting 400,000 square feet of office space in the World Financial Center up for sublease.

This latest development comes as other financial-services firms located in lower Manhattan have opted to put office space on the market, sending fears of further job losses in the area.

See also:

17 Oct 01 | Business
Banks blame attacks for profits woes
16 Jul 01 | Business
Three Wall Street giants downgraded
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