This summary is based on the third quarter fiscal 2007 earnings call conducted by Merrill Lynch & Co Inc. (MER: chart) on October 24, 2007.

Chairman and CEO: Stan O’Neal
Co-President: Ahmass Fakahany
Co-President: Greg Fleming
Chief Financial Officer: Jeff Edwards
Investor Relations: Sarah Furber

Key Investors Issues

- The net loss was $2.85 per share compared to earnings of $3.14 in the prior year.
- Quarterly revenue dropped 94% over last year to $577 million.
- Merrill Lynch repurchased 19.9 million shares for $1.5 billion during Q3 of 2007.

Third Quarter Fiscal 2007 Financial Highlights

Merrill Lynch reported a net loss from continuing operations of $2.3 billion, or $2.85 per diluted share.

This is significantly below net earnings of $2.22 per diluted share for the second quarter of 2007 and $3.14 for the third quarter of 2006. Third-quarter 2006 net earnings per diluted share, excluding the impact of the one-time, after-tax net benefit of $1.1 billion ($1.8 billion pretax) related to the merger of Merrill Lynch Investment Managers (MLIM) and BlackRock were $1.97. Third-quarter 2007 results reflect significant net write-downs and losses attributable to Merrill Lynch''s Fixed Income, Currencies & Commodities (FICC) business, including write-downs of $7.9 billion across CDOs and U.S. subprime mortgages, which are significantly greater than the incremental $4.5 billion write-down Merrill Lynch disclosed at the time of its earnings pre-release. These write-downs and losses were partially offset by strong revenues in Global Wealth Management (GWM), Equity Markets and Investment Banking, particularly in regions outside of the U.S.

The total net revenues of $577 million decreased 94% $9.8 billion in the prior-year period and were down 94% from $9.7 billion in the second quarter of 2007.

Business outside of the U.S. contributed 55% of the firm''s total net revenues for the first nine months of 2007. This percentage was 60% for GMI business when you exclude the sub-prime mortgages and CDOs.

In the Pacific Rim, the pretax earnings are up 100% year-to-date, and the firm is continuing to leverage both strong market growth and its on the ground presence in the region.

Another core priority for the firm is to take advantage of opportunities for its institutional and global wealth management franchises to work more closely together on a fully integrated basis to accelerate growth. This is especially important in the Pacific Rim, India, Latin America, the Middle East and in parts of Europe. In many of these markets, the company’s model for growth will be more of a high net worth, private investment banking model that emphasizes the increasing product and customer overlap, which occurs between high net worth individuals and institutions.

- Merrill Lynch''s third-quarter 2007 pretax net loss was $3.5 billion.
- At the end of the third quarter, book value per share was $39.75, down slightly from the end of the third quarter of 2006.

The compensation expenses were $2 billion for the quarter versus $4.8 billion in the second quarter and $3.9 billion from the 2006 third quarter.

The year-to-date compensation ratio of 58.1% is about 9 percentage points higher than the first nine months of 2006 and reflects the company’s focus on continuing to recruit and retain top tier talent to drive its growth initiatives forward.

The company is not wedded to specific compensation ratios and do not expect to reduce overall compensation levels in line with its significantly lower revenues, given that managers and employees of other businesses are producing record performance that is critical to the firm’s plans for growth. As always, progression toward the full year ratio will depend on the environment, but the company anticipates that it could remain at elevated levels in the fourth quarter.

The non-compensation costs increased to $2.1 billion for the quarter.

This was driven by approximately $100 million write-off of First Franklin identifiable intangible assets, as well as significant growth in BC&E expensesk, reflecting higher volumes.

The effective tax rate was 23.1% for the first nine months of 2007, down from 25.9% during the prior-year period.

At this point, the firm expects that rate to increase modestly in the fourth quarter, subject to the usual factors: business mix, changes in tax laws and settlements.

The company''s liquidity position at quarter end includes cash and other highly liquid securities of approximately $70 billion, readily available to the holding company.