Thursday, December 20, 2007

Wall Street 2007 - Shanghai, Dubai, Mumbai or Goodbye



October 24, 2007 - Merrill Lynch announced $8.4 billion fourth-quarter loss, most associated with losses in subprime mortgage market; biggest loss in its 93-year history, biggest known loss in Wall Street history; October 30, 2007 - CEO, E. Stanley O'Neal, retired from company. December 24, 2007 - agreed to sell less than 10% stake: 1) $5 billion in new stock (at a discount) to Temasek Holdings (Singapore's sovereign investment company controlled by finance ministry), 2) $1.2 billion (discounted stock) to Davis Selected Advisers (Tucson, AZ); 3) will sell most of Merrill Lynch Capital, commercial finance business, for $1.3 billion to General Electric; January 17, 2008 - reported $9.8 billion fourth-quarter loss (almost matched loss reported for period by Citigroup, company three times Merrill’s size); exceeded analysts’ forecasts, reflected $16.7 billion of write-downs on mortgage-related investments, leveraged loans.

November 5, 2007 - Citicorp reported fourth-quarter write-down of between $8 billion to $11 billion related to subprime mortgages, on top of a $5.9 billion dollar write down announced in October; sold $7.5 billion stake to Abu Dhabi Investment Authority to shore up its capital base; Charles O. Prince III fired as CEO (since October 2003); January 14, 2008 - reported fourth-quarter results - $18.1 billion write-down on subprime mortgage-related exposures (much higher than early November estimate of $8 - $11 billion); disclosed $12.5 billion investment - sold $6.6 billion stakes to foreign investors (including Korean, Kuwaiti governments); $9.83 billion loss for quarter, largest quarterly loss in bank's history; 41% dividend cut planned.

December 10, 2007 - UBS, world’s largest provider of banking services to wealthy, wrote down a further $10 billion in value of its mortgage-backed assets, on top of $3.7 billion charge in October (reported first quarterly loss in 5 years); biggest casualty of American home-mortgage crisis among banks outside United States; sold more than 10% stake to investors from Singapore, Middle East - Government of Singapore Investment Corporation, G.I.C., will invest $9.7 billion, unnamed Middle Eastern investor will inject $1.8 billion into bank; January 30, 2008 - warned it would mark down additional $4 billion in securities, brought total subprime-related residential mortgage write down to about $18 billion, first annual loss since was formed in 1998 merger.

December 18, 2007 - Morgan Stanley posted fourth-quarter loss of $3.6 billion, or $3.61 a share (far surpassed analysts' expectations of $0.39 per share), first-ever quarterly loss in its 72-year history, after taking additional $5.7 billion write-down related to subprime mortgages (value reduced by $9.4 billion, one of largest devaluations on Wall Street); said would sell a $5 billion stake to China Investment Corporation (China's sovereign wealth fund), to shore up its capital = 9.9% stake; chief executive, John J. Mack, took full responsibility, said would forego bonus for 2007.

December 19, 2007 - Bear Stearns reported a steep fourth-quarter loss, the first ever in its 84-year history; lost about $854 million ($6.90 a share) for fourth quarter, compared to profit of $563 million ($4 a share) for same time last year (analysts had expected loss of $1.82 a share); wrote down $1.9 billion related to holdings in mortgages, mortgage-based securities, up from $1.2 billion anticipated last month; January 8, 2008 - James E. Cayne, CEO and 6% shareholder, retired as an employee of the firm.

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