Merrill Lynch Profit Falls 26%

But the brokerage beats earnings estimates.
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Merrill Lynch


said first-quarter earnings fell 26% from the year-ago period, as a modest increase in trading volume only partially offset weak mergers and acquisitions activity.

Merrill earned $647 million, or 67 cents a diluted share, compared to $847 million, or 92 cents a share, a year ago. The results were 2 cents above analysts' consensus estimates for 65 cents a share.

Revenue was $5.1 billion, down 21% from $6.4 billion last year, but up from $4.7 billion in the fourth quarter. Commission revenue fell 18% from a year ago, while underwriting revenue dropped 27%.

"Although the market environment did not improve meaningfully from the fourth quarter, the targeted actions we took to re-size our businesses are having a substantial positive impact on our financial performance," said Merrill's CEO, David Komansky, and its COO, Stan O'Neal, in a statement.

Merrill reported a loss in the fourth quarter for the first time since 1998 as a result of a restructuring. In 2001, the company cut close to 15,000 jobs to bring its costs in line with operations. Merrill said it cut an additional 1,000 jobs since the end of 2001, leaving its total headcount at 56,400.

In the first quarter, Merrill's noninterest expenses decreased 35% from the previous quarter.

Merrill Lynch is among the investment banks that are being scrutinized for their research. Two weeks ago, the New York state attorney general

obtained a court order requiring Merrill Lynch to change its research process after an investigation by the office concluded its advice was biased.