When O'Neal became CEO five years ago, he departed from the company's former ways of a no-layoff policy. Despite being an unpopular move among the ranks, he cut payroll dramatically. The restructuring was one factor that led to doubling the firm's profit level to an average topping $5 billion annually from 2003 to 2006.
O'Neal moved on, taking even greater risks, pushing Merrill to follow other banks making big bets in collaterized debt obligations, which included subprime debt. But that risk didn't work: Merrill lost $2.24 billion in the third quarter.
With those losses, O'Neal knew he had to take another risk, which turned out to be a desperation swing for the fences. Instead of a home run, O'Neal struck out. He made an unapproved board call to Wachovia Corp. CEO G. Kennedy Thompson about a possible merger — a move that would never materialize because many such as Deal Journal say the Charlotte, N.C., bank is still busy digesting its prior acquisitions, Golden West Financial Corp. and A.G. Edwards Inc.
For the Merrill board, that call to Wachovia was the final nail in the coffin, and they knew a leadership change was in order. — Gerald Magpily
See Wall Street Journal article
See New York Times article
See Dealscape: Hunting for a new head, Merrill in peril
See Dealscape: O'Neal's real deal of the day
See Dealscape: Merrill Lynch-Wachovia tie-up talk
See Dealscape: Is wounded bull Merrill a target?
