The script for today was a short squeeze, but just before the open Meredith Whitney bombed da boyz with a serious earning estimate cut on Merrill Lynch.
This after a general pall of gloom was cast by the worse than expected ADP jobs estimate. The Street is edgy about the June Jobs Report coming to town tomorrow ahead of the US holiday weekend.
Look for the Street to try hard to shake all this off, as the fops of finance are sitting on a pile of cash and the shorts are leaning too heavily on the financials.
We wonder how long it will be before Meredith gets a fabulous offer from one of the bigger houses, and then gets assigned to cover something else. Thanks for 'telling it like it is' Meredith.
Merrill Lynch Estimates Cut by Oppenheimer's Whitney
By Josh Fineman
July 2, 2008 09:42 EDT
July 2 (Bloomberg) -- Merrill Lynch & Co. had its second- quarter earnings estimate cut by Oppenheimer & Co.'s Meredith Whitney on expectations subprime writedowns will be as large as $5.8 billion.
Merrill, the third-biggest U.S. securities firm, will probably lose $4.21 a share, Whitney said in a report today, compared with her earlier estimate for a profit of 20 cents for the New York-based company.
Analysts and investors are reversing their predictions that the worst of the credit-market contraction is over after more than $400 billion of writedowns and losses by the world's largest financial institutions. Lehman Brothers Holdings Inc. last month increased its loss estimate for Merrill and more than doubled its prediction for the firm's subprime writedown, to $5.4 billion.
``Given Merrill's headwinds of de-leveraging and the next disruptive step of restructuring, we believe Merrill's shares are expensive,'' said Whitney, who has an ``underperform'' rating on the shares.
Merrill, which reports second-quarter earnings in two weeks, fell 25 cents, or 0.8 percent, to $32 at 9:36 a.m. in composite trading on the New York Stock Exchange. The stock is down 40 percent this year.
Sanford Bernstein & Co.'s Brad Hintz last month reduced his estimate for Merrill to a loss of 93 cents a share from a profit of 82 cents and predicted a writedown of $3.5 billion. Goldman Sachs Group Inc. analyst William Tanona reduced his Merrill estimate to a loss of $2 from earnings of 25 cents and predicted a writedown of $4.2 billion.
Whitney estimated a wider 2008 loss of $5.37 compared with her earlier prediction for a loss of 45 cents. For 2009, she sees profit of $2.85, down from $4.05 previously.
Whitney also said she expects Merrill to announce an asset sale, probably involving its stakes in BlackRock Inc. or Bloomberg LP, the parent of Bloomberg News.
To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net.
