Business Insight Zone

Merrill Lynch CEO Stan O’Neal better be glad that he’s been regarded more highly than Citigroup CEO Chuck Prince up to now, because Merrill’s horrific, embarrassing writedown of more than $8 billion in bad debt puts even Citi’s $5 billion-plus writedown to shame. I mean, Citi’s writedown hurt profits, but the big bank still turned a profit; Merrill’s writedown leaves it billions in the red for the quarter.

David Gaffen of the Wall Street Journal’s MarketBeat blog has already posted a great two-fer on Merrill this morning, starting with this summary piece

Stan O’Neal and the Deathly Hallows

and then moving on to this liveblog of the Merrill conference call this morning

Live-Blogging the Merrill Conference Call

Sound like the call was a mite contentious — and why not? Merrill now rightly faces many pointed fingers about its gross underestimation of the writedown loss as recently as a couple of weeks ago. Witness this tidbit that Gaffen quotes:

“Okay, here is the deal. When you come out a pre-announce, you are then required to come in very close to this number,” writes Todd Sullivan on his Valueplays blog. “A few hundred million would have been acceptable but to almost double to estimate and be off by a almost $4 billion, heads will roll.”

and this quotation from Bloomberg:

“If you can’t guide toward a reasonable expectation over two weeks, clearly you’ve got bigger problems,” said William Fitzpatrick, a financial-services analyst at Johnson Asset Management…

When your whole business is managing money, you’re supposed to be much better than this at telling your investors about where that money is going.