Merrill May Write Down $5.4B (Update)

Downgrades to bond insurers will hit the values of Merrill assets.
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Updated from 10:39 a.m. EDT

A Lehman Brothers analyst lowered his estimates for

Merrill Lynch

(MER)

, predicting downgrades to monoline bond insurers

MBIA

(MBI) - Get Report

and

Ambac

(ABK)

will cause some $5.4 billion in new writedowns.

Lehman Brothers analyst Roger Freeman, who had been calling for a loss of 53 cents per share, is now estimating losses will be $2.99 a share. Citing a "deeper review of Merrill's monoline exposures," he increased his writedown estimate from $3 billion and lowered his price target to $44 from $47.

Merrill shares were down 1.8% to $32.57 in recent trading Friday.

CNBC

, citing sources close to the firm, reported Friday afternoon that Merrill is in preliminary discussions about selling its passive minority stake in Bloomberg.

Lehman joins Goldman Sachs and Sanford Bernstein in ratcheting up its pessimism. Analysts at those firms

lowered their estimates

for Merrill on Thursday.

Merrill is set to report results July 17, making it the last of the big four U.S. brokers to do so.

Lehman Brothers

(LEH)

posted a loss of close to $3 billion in its most recent quarter, while

Goldman Sachs

(GS) - Get Report

easily exceeded analysts' forecasts.

Morgan Stanley

(MS) - Get Report

earned a profit from selling assets, even though it saw a slowdown in its major businesses.

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