I don't know if this is good news or bad...
January 25, 2000
Merrill Soars Past Expectations
By MICHAEL BRICK
NYTimes.com/TheStreet.com, 4:03 p.m.
Merrill Lynch stunned Wall Street Tuesday with quarterly earnings results that annihilated analysts' expectations.
Shares of the New York-based brokerage's stock closed up 5, or 6.61 percent to 80 11/16.
For the fourth quarter ended Dec. 31, the company reported net income of $764 million, or $1.80 a diluted share, on net revenue of $5.9 billion. In the year-ago quarter, Merrill reported earnings of $359 million, or 86 cents a diluted share, on revenue of $4.1 billion.
Analysts polled by First Call/Thomson Financial expected the company to earn $1.39 a share.
During the quarter, Merrill managed the initial public offering of Infonet Services Group , contributing to the more than $1 billion the brokerage made on investment banking alone.
For the full year, Merrill earned $2.6 billion compared to $1.5 billion for 1998.
The investment banking success was hardly a surprise, said Steve Galbraith, analyst for Bernstein. But the money from new clients took the Street by surprise and drove the stock price gains Tuesday, he said.
"The death knell of Merrill's retail business has been exaggerated," said Galbraith, who rates the stock a hold and whose firm has not done underwriting for Merrill.
The amount of new client assets gained during the quarter -- $36 billion -- is greater than the amount the firm brought in during the prior three quarters combined, he noted. Galbraith credited Merrill's move to offer both fee- and commission-based trading and online accounts.
The massive gain all but guarantees pressure will be on Merrill in the first quarter: "Is this a one-off?" Galbraith asked. "Schwab's been eating their lunch for years."
Unlimited Advantage, the online trading system, drew assets 20 times faster than previous fee-based products, the company said. But only $6 billion of the $63 billion total in the system was new money in the fourth quarter. |
