Merrill Warns of Substantial Earnings Shortfall
(Updated from 8:01 a.m. ET)
Merrill Lynch
(MER)
warned this morning that earnings for the second quarter will be much lower than analysts expect as a result of weak stock and debt trading operations.
The brokerage and securities company warned that second-quarter earnings would come in between 52 cents and 57 cents a share. Analysts polled by
Thomson Financial/First Call
expected income of 82 cents a share. In the latest first quarter, Merrill earned 87 cents.
Shares of Merrill Lynch were trading down 8.7% to $60.70 in
Instinet
action before the bell.
The company said second-quarter revenue will fall about 15% from the top line of $6.4 billion posted in the latest first quarter. The company added that a weak market has created softness over a range of businesses.
Merrill said both equity-trading and debt-trading revenue will be lower in the June quarter than in the first fiscal quarter. The company did say it was adding market share within its investment banking business.
The company said revenue for the third quarter will also likely remain weak. "Although the outlook for third quarter revenues remains weak, we are making solid progress on resource allocation and expense-reduction initiatives," the company said in a press release. "We continue to execute our margin-improvement plans. These actions will position us for increased profitability when market conditions improve." Merrill said its current forecasts for 2003 are still on target.