Merrill Sheds Profits, Bloomberg (Update2)

Updated from July 17.

Merrill Lynch(MER Quote) posted a second-quarter loss far beyond Wall Street expectations on Thursday, as the bank sold its stake in Bloomberg LP back to the financial information provider to shore up capital.

Merrill reported a loss of $4.7 billion, or $4.97 per share, driven by its exposure to risky structured finance, residential mortgages and investments in the U.S. banking sector. It is the firm's fourth consecutive quarterly loss, comparing to net earnings of $2.1 billion, or $2.24 per share, a year earlier. Analysts had expected a loss of $1.91 per share, on average.

Merrill posted $9.4 billion in writedowns and impairment charges, with negative net revenue of $2.1 billion. That figure compares with a positive $9.5 billion a year earlier.

Its stock -- which had risen nearly 10% over the course of Thursday -- lost ground in after-market trading following the announcement. Recently, shares were shedding 1.9% to $30.16 in premarket trading.

Better-than-expected results at JPMorgan Chase(JPM Quote) and Wells Fargo(WFC Quote) had supported bank stocks on Wednesday and Thursday, but Merrill's bleak report was a reminder of the housing and credit-related problems the financial sector continues to face.

Merrill lost $3.5 billion on U.S. super-senior asset-backed collateralized debt obligations, as well as $2.9 billion on credit-valuation adjustments, much of which was related to hedges on those CDOs. It also lost $1.7 billion from investments in U.S. banks and $1.3 billion from residential real-estate exposures.

Merrill sold its 20% interest in Bloomberg back to the company for $4.43 billion. News of the sale first leaked on Wednesday. Merrill also said it is in negotiations to sell its Financial Data Services subsidiary for more than $3.5 billion. That business provides administrative services for mutual funds, retail banking and wealth management.