Merrill Takes a Mammoth Hit

The depth of Merrill's despair in the fixed-income area was telegraphed earlier this week, when the company shook up the management of that unit.

Merrill's move comes at the end of a week of writedowns on Wall Street. Citi (C) led things off with a $3.3 billion writedown Monday, and big overseas competitors Deutsche Bank (DB) and UBS (UBS) also took sizable hits.

Unlike Citi chief Chuck Prince, who predicted a return to normal earnings conditions in the fourth quarter, O'Neal was cautious in his outlook Friday.

"Although the outlook for fourth-quarter revenues remains difficult to predict, we continue to see evidence of strong long-term growth trends in each of our global businesses," he said. "While it is very early in the current quarter and despite continued challenges in structured finance, we are beginning to see signs of a return to more normal activity levels in a number of markets."

Merrill fell 23 cents to $74.55.

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