Merrill Lynch & Co. Inc.

4 World Financial Center
New York, NY 10080

212-449-1000

www.ml.com

 

2003 net revenues: $20.1 billion

2003 net income: $3.9 billion

2003 investment banking revenues: $2.6 billion

2003 debt underwriting revenues: $853 million  

 

2003 total employees: 48,100

 

Chairman and Chief Executive Officer: E. Stanley O'Neil  

 

Merrill Lynch Lynch & Co. Inc. is a holding company that provides investment banking, broker-dealer, financing, wealth and asset management, insurance, lending and related products and advisory services to investors, businesses and governments.

 

History

The company was founded in 1914 by Wall Street bond salesman Charles Merrill Lynch, who became known as the man who brought Wall Street to Main Street. Merrill Lynch and his friend and business partner, Edmund Lynch, sold their retail business to Wall Street’s largest brokerage, E. A. Pierce, in 1930 and operated as an investment bank during the Depression. It reacquired its retail business in 1940 and became the first member of the New York Stock Exchange to incorporate (1959) and go public (1971). Its underwriting business peaked in the 1980s. The company was slow to get into the online financial services business saying that investors needed skilled human guidance.

 

Once the only company that successfully combined retail brokerage with other financial services, Merrill Lynch Lynch has faced fierce competition in recent years. Along with a slow economy and its share of corporate scandals and bad publicity, the company has gone through a broad restructuring that resulted in the elimination of thousands of jobs and the loss of several top-ranking executives. The company’s financial performance at the end of 2003, however, has been one of the best in its history.

Business Segments

 

The company reports its results in three business segments:

Global Markets and Investment Banking group (GMI)

Global Private Client (GPC)

Merrill Lynch Lynch Investment Managers (MLIM)

 

GMI provides capital markets and investment banking products and services, including raising capital for clients through securities underwriting, private placements and loan syndications. According to the company's 2003 10-K, it has one of the largest equity trading and underwriting operations in the world.

 

In 2003, GMI changed its operating structure to form two distinct divisions:

Global Markets

Investment Banking

GMI's Investment Banking division includes the Global Capital Markets & Financing Group that is responsible for "all capital-related activities for issuer clients, including equity and debt capital markets, corporate finance, public finance and leveraged finance," according to the company's 2003 10-K.

 

The company's underwriting focus has recently moved towards longer-duration, higher- margin issues. Its 2003 10-K, however, notes that the debt underwriting business is extremely competitive and that some transactions are not profitable. In addition, the underwriting, trading and advisory segments of its business have been particularly affected by consolidation within the financial services industry and by the entry of non-traditional competitors. 

 

Income/Revenues from Business Segments

Merrill Lynch Lynch’s net earnings were $4.0 billion in 2003, an increase of 59 percent from net revenues of  $2.5 billion in 2002. Net revenues increased 8 percent to $20.2 billion in 2003.

 

In 2003, GMI's total net revenues were $10.07 billion or 49 percent of the company's total net revenues. GMI's net pretax earnings were $3.9 billion and pre-tax profit margins were 39 percent.

 

Investment banking revenues were $2.6 billion in 2003, an increase of 9 percent compared to 2002, attributed to higher debt underwriting revenues. The increase in debt underwriting revenues was partially offset by lower equity underwriting and strategic advisory revenues.

 

The company's total underwriting fees for 2003 were $1.6 billion, an increase of 11 percent from 2002. Debt underwriting revenues in 2003 were $853 million, 35 percent higher than in 2002. This increase in debt underwriting revenues is attributed to favorable interest rates and lower credit spreads.  

 

Underwriting fee include fees earned from underwriting of debt and equity, equity-linked securities and loan syndication and commitment fees.