Apr 18, 2001 - 12:47 PM

Merrill Lynch First Quarter Earnings Drop 21 Percent By Alan Clendenning The Associated Press

NEW YORK (AP) - Net income for brokerage powerhouse Merrill Lynch dropped 21 percent for the first quarter as the stock market decline cut into the firm's trading and investment banking profits, the company said Wednesday. The results, however, beat analysts' expectations. Merrill Lynch cut 1,700 jobs during the quarter to reduce costs, but net income dropped to $874 million, or 92 cents per share, from $1.1 billion, or $1.24 per share, in the first quarter of 2000. Analysts surveyed by Thomson Financial/First Call, had expected first quarter 2001 earnings of 90 cents per share.

The outlook for the second quarter is uncertain at best, said Thomas Patrick, Merrill Lynch's chief financial officer. In a conference call, he warned analysts that the firm may not be able maintain first quarter profit levels if current market conditions persist.

"The main focus of Merrill Lynch is equities, and the equities markets around the world have suffered," Patrick said.

He said this year's stock market downturn is more comparable to the extended bear market of 1973-74 than it is to the bear market of 1987, when the stock market made a relatively rapid recovery.

"I don't think there's necessarily any quick rebound here," Patrick said.

Merrill Lynch's first quarter commission revenues dropped 30 percent, to $1.5 billion, and earnings from the company's division for individual investors declined 27 percent, to $355 million.

Underwriting revenue for helping companies issue stock dropped 6 percent to $629 million, and revenue for advising companies on mergers and acquisitions deals dropped 13 percent to $284 million.

Total net revenue was $6.4 billion, down 15 percent from $7.5 billion during the period a year earlier.

Merrill Lynch said the job cuts since the beginning of the year have reduced its work force to 70,300. Some offices were closed, and other jobs were eliminated through attrition and reduced hiring, the company said.

More efforts to pare costs may be in the works, said Merrill chairman and CEO David Komansky.

"We are cautious about the near-term outlook, and are accelerating our actions to reallocate resources," he said.

Shares of Merrill Lynch rose $6.41, or 10.6 percent, to $67.01 in afternoon trading on the New York Stock Exchange.

AP-ES-04-18-01 1246EDT © Copyright 2001 Associated Press. All rights reserved.

-- Anonymous, April 18, 2001