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Merrill Lynch & Co. may take a $6 billion writedown in for the second quarter and could look to raise capital by selling part of its stake in BlackRock, an investment management firm, for up to $2 billion, according to a Citigroup report.
The Wall Street investment bank may also report a second-quarter loss of $3.95 per share, according to a Citigroup analysts led by Prashan Bhatia. The bank's writedown may be due largely to losses in high-grade-collateralized debt obligations, the analyst wrote in a note to clients Sunday.
Merrill has lost $14.9 billion in the past six quarters. During that time it has raised $600 million more in capital than it has lost, Bhatia noted.
To raise additional funds to bolster its balance sheet, the bank could get between $1 billion and $2 billion from the sale of part of its stake in Blackrock Inc. It could also save more than $1 billion by reducing its dividend.
In the report Bhatia also increased his loss per share estimate for 2008 to $6 from $1. He also lowered the stock's target price from $75 to $65. It is rated a "buy."
Merrill could also sell its investment in privately held media company and financial data provider Bloomberg LP for up to $5 billion, the Wall Street Journal said today.
Shares of Merrill fell 99 cents, or 3.15 percent to $30.14 in afternoon trading on the New York Stock Exchange.
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