Merrill Lynch to Take a Charge for Job Cuts

Merrill Lynch & Co. will take a $1.7-billion charge, its largest ever, as President Stanley O’Neal leads a retreat from an expansion that left the firm less profitable than its rivals.

The fourth-quarter charge reflects the cost of eliminating 9,000 jobs, scaling back in Japan and selling brokerages in Canada and South Africa. The firm will put less emphasis on winning market share in bond sales and focus more on profitability, O’Neal said.

The slide in mergers and stock sales has crimped earnings and pushed brokerage stocks lower. Merrill’s shares have lagged behind rivals’, falling 20% in the last year versus a decline of 12% for the S&P; index of financial services companies. The shares fell 24% in 2001, their biggest drop since 1987.

Since O’Neal overhauled top management, installing his picks atop the firm’s four main businesses in October, Merrill shares have surged 40% as investors anticipated cost cuts. That rise topped Goldman Sachs Group Inc.’s 22% rise and Morgan Stanley Dean Witter & Co.’s 18% increase.

Merrill shares rose $1.55 to close at $57.99 on the New York Stock Exchange.