Bloomberg.com

O'Neal Ouster Makes Mess of Maternal Merrill Lynch 
By Bradley Keoun
Oct. 29 (Bloomberg)

(This article has been compressed for FW-UFO purposes - Last paragraph is our focus)


Losing a lot of money for shareholders is the surest way to end a career on Wall Street, 
as Merrill Lynch & Co.'s Stan O'Neal found out this month after the embattled chief executive 
officer delivered the worst news in the firm's 93-year history. 

The third-quarter loss of $2.24 billion, or $2.82 a share, was about six times more than O'Neal 
acknowledged on Oct. 5 and derived from $8.4 billion of writedowns for the subprime mortgages, 
asset-backed bonds and loans gone bad under his watch. 

Merrill's result, coming during a credit market shakeout that triggered a run on a British bank 
and caused Switzerland's largest financial institution to fire its CEO, was the biggest quarterly 
debacle in the history of the securities industry. That was enough for the board of 11, nine of 
whom were handpicked by O'Neal during his five years as CEO, to make it clear the 56- year-old 
grandson of a former slave is leaving, possibly as early as today, according to a person with 
knowledge of the directors' discussions.... 

...To his predecessors, many of whom resented his penchant for getting rid of dozens of Merrill 
loyalists, the losses are a painful reminder of how much has changed at the brokerage they used 
to call ``Mother Merrill.'' 


...``I've been in touch with many, many of our fellow employees and ex-employees and they're sick, 
everyone is sick about it, as I am too,'' Daniel Tully, Merrill's CEO from 1992 to 1996, said 
in an interview this weekend. ``It's awful,'' he said, becoming the first former head of the 
brokerage to castigate O'Neal... 


...Merrill's directors must now decide whether a new CEO exists in the firm's depleted ranks or 
look outside since O'Neal pushed out so many of the leaders groomed by Tully and his successor, 
David Komansky... 
 

...O'Neal put more of the firm's capital at risk by investing it directly in leveraged buyouts 
including British retailer Debenhams Plc, car-rental company Hertz and HCA Inc., the U.S. hospital 
chain. Then Merrill bought subprime lender First Franklin for $1.3 billion in December, just as the 
real-estate market peaked and mortgage delinquencies began accelerating... 


'Danny Boy' 

Komansky, receiving the treatment reserved for retiring Merrill chiefs, was given an office on Manhattan's 
Fifth Avenue. Tully, meanwhile, had been serenaded by Irish tenor Finbar Wright with the song ``Danny Boy'' 
at the firm's annual meeting after announcing a record quarterly profit. O'Neal may not be so fortunate. 



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