Merrill, it seems, is no longer bullish on America.
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Merrill, it seems, is no longer bullish on America.
In quick succession, just days after Stanley O'Neal took over as chief executive of Merrill Lynch Co. on Dec. 2, the firm announced several executive changes. .
G. Kelly Martin, a member of Merrill's executive committee, stepped down as president of the international private client business to pursue other interests. Michael Marks, chairman of its European, Middle East and African operations, retired. Paul Roy, co-president of the global markets and investment banking business, said that he, too, would leave the firm. .
Absorbing their portfolios were James Gorman, president of Merrill's brokerage network in the United States and a former McKinsey Co. executive who joined the firm in 1999, and Arshad Zakaria, Roy's co-president, who at 40 is now the youngest head of any big banking and securities division on Wall Street, the unit responsible for 60 percent of Merrill's profit. It happens all the time - a new chief executive names his own team, after all. But at Merrill, the bloodletting has actually been going on since O'Neal became president in July 2001, starting with the resignations, under pressure, of Jeffrey Peek, the head of asset management, and Thomas Davis, who had run the investment banking business. .
More important, it signals a cultural and management revolution unique in the firm's history. In contrast with its peers on Wall Street, Merrill, under O'Neal's iron grip, is ruled by the cold, hard view that the current gloom in the markets will not lift soon. .
Merrill, it seems, is no longer bullish on America. .
Over the past two years, O'Neal's crew, which also includes Thomas Patrick, the executive vice chairman, has cut 18,600 jobs, or 25.8 percent of the work force. No other investment firm has come close to cutting so deeply. .
Merrill's new management team is viewed by insiders and outsiders alike as extraordinarily numbers-oriented. Their supporters call them realists; some others see them as cynics. .
Zakaria's ascent, in particular, has raised eyebrows on Wall Street. Investment bankers who have worked with him say he is a "quant" - expert at putting together complicated financial instruments but lacking in experience in relationship banking, which generally demands more advanced "people skills." .
There is no doubt that Zakaria is talented. What matters more to O'Neal, however, is loyalty, which all in the new guard at Merrill seem to have in abundance. .
The revolution is set to be completed in April with the departure of David Komansky, the former chief executive and current chairman. Komansky, with his backslapping bonhomie born of his years as a top-producing broker, is already a faded symbol of a global expansion strategy that resulted in the corporate bloat that O'Neal is working so hard to pare. .
Inside Merrill, several employees said, morale is grim. But O'Neal and company - all of whom declined to be interviewed for this article - have supporters who say that they are the right managers at the right time. "These guys are workers," said Stephen Hammerman, a former Merrill vice chairman who retired from the company in February. "They are rolling their sleeves up and are here to do a job. They know how to deal with clients, and they know how to deal with money." .
To impose his view, O'Neal has brought in a group of people that contrasts sharply with past management teams. Gorman, 44, is from Melbourne. Zakaria hails from Bombay. The new chief financial officer, Ahmass Fakahany, also 44, is from Cairo. Sergio Ermotti, 42, co-head of global equity markets, is from Lugano, Switzerland. Dow Kim, 40, head of global debt, is a native of Seoul. .
Merrill's top managers are among the youngest executives on Wall Street. None has been with the firm for more than 20 years, and none has risen from within its vast private client group, Merrill's usual source for top managers. For all of them, starting with O'Neal, the idea of Mother Merrill as a nurturing bureaucratic womb is dead, according to top bankers at the firm. .
For the moment, analysts are cheering O'Neal and his number-crunchers. In the wake of the layoffs, profit margins are rising in important areas such as investment banking and the brokerage business. The company's stock price fell 27 percent in 2002, in line with other brokerage stocks, and closed Friday at $39.97 - 32 percent off its 52-week high. .
Other large Wall Street firms are increasing layoffs, a sign that they, too, are growing more concerned about the depths of the market's slide. .
"Although you worry that they may have cut too far, the fact that Merrill's competitors are throwing in the towel is a confirmation that O'Neal was right," said Guy Moszkowski, an analyst at Salomon Smith Barney Inc. "And while they have downsized at just about every level, they have kept their rainmakers." .
Still, many wonder how a bear-market Merrill will fare when equity markets rebound. Over the past year, many top dealmakers have left the firm, and Merrill has dropped to sixth place from third in worldwide merger advisory work. If O'Neal and his team are wrong about the length of the market's collapse, Merrill may well suffer - and require another redesign. NEW YORK In quick succession, just days after Stanley O'Neal took over as chief executive of Merrill Lynch Co. on Dec. 2, the firm announced several executive changes. .
G. Kelly Martin, a member of Merrill's executive committee, stepped down as president of the international private client business to pursue other interests. Michael Marks, chairman of its European, Middle East and African operations, retired. Paul Roy, co-president of the global markets and investment banking business, said that he, too, would leave the firm. .
Absorbing their portfolios were James Gorman, president of Merrill's brokerage network in the United States and a former McKinsey Co. executive who joined the firm in 1999, and Arshad Zakaria, Roy's co-president, who at 40 is now the youngest head of any big banking and securities division on Wall Street, the unit responsible for 60 percent of Merrill's profit. It happens all the time - a new chief executive names his own team, after all. But at Merrill, the bloodletting has actually been going on since O'Neal became president in July 2001, starting with the resignations, under pressure, of Jeffrey Peek, the head of asset management, and Thomas Davis, who had run the investment banking business. .
More important, it signals a cultural and management revolution unique in the firm's history. In contrast with its peers on Wall Street, Merrill, under O'Neal's iron grip, is ruled by the cold, hard view that the current gloom in the markets will not lift soon. .
Merrill, it seems, is no longer bullish on America.
G. Kelly Martin, a member of Merrill's executive committee, stepped down as president of the international private client business to pursue other interests. Michael Marks, chairman of its European, Middle East and African operations, retired. Paul Roy, co-president of the global markets and investment banking business, said that he, too, would leave the firm. .
Absorbing their portfolios were James Gorman, president of Merrill's brokerage network in the United States and a former McKinsey Co. executive who joined the firm in 1999, and Arshad Zakaria, Roy's co-president, who at 40 is now the youngest head of any big banking and securities division on Wall Street, the unit responsible for 60 percent of Merrill's profit. It happens all the time - a new chief executive names his own team, after all. But at Merrill, the bloodletting has actually been going on since O'Neal became president in July 2001, starting with the resignations, under pressure, of Jeffrey Peek, the head of asset management, and Thomas Davis, who had run the investment banking business. .
More important, it signals a cultural and management revolution unique in the firm's history. In contrast with its peers on Wall Street, Merrill, under O'Neal's iron grip, is ruled by the cold, hard view that the current gloom in the markets will not lift soon. .
Merrill, it seems, is no longer bullish on America. .
Over the past two years, O'Neal's crew, which also includes Thomas Patrick, the executive vice chairman, has cut 18,600 jobs, or 25.8 percent of the work force. No other investment firm has come close to cutting so deeply. .
Merrill's new management team is viewed by insiders and outsiders alike as extraordinarily numbers-oriented. Their supporters call them realists; some others see them as cynics. .
Zakaria's ascent, in particular, has raised eyebrows on Wall Street. Investment bankers who have worked with him say he is a "quant" - expert at putting together complicated financial instruments but lacking in experience in relationship banking, which generally demands more advanced "people skills." .
There is no doubt that Zakaria is talented. What matters more to O'Neal, however, is loyalty, which all in the new guard at Merrill seem to have in abundance. .
The revolution is set to be completed in April with the departure of David Komansky, the former chief executive and current chairman. Komansky, with his backslapping bonhomie born of his years as a top-producing broker, is already a faded symbol of a global expansion strategy that resulted in the corporate bloat that O'Neal is working so hard to pare. .
Inside Merrill, several employees said, morale is grim. But O'Neal and company - all of whom declined to be interviewed for this article - have supporters who say that they are the right managers at the right time. "These guys are workers," said Stephen Hammerman, a former Merrill vice chairman who retired from the company in February. "They are rolling their sleeves up and are here to do a job. They know how to deal with clients, and they know how to deal with money." .
To impose his view, O'Neal has brought in a group of people that contrasts sharply with past management teams. Gorman, 44, is from Melbourne. Zakaria hails from Bombay. The new chief financial officer, Ahmass Fakahany, also 44, is from Cairo. Sergio Ermotti, 42, co-head of global equity markets, is from Lugano, Switzerland. Dow Kim, 40, head of global debt, is a native of Seoul. .
Merrill's top managers are among the youngest executives on Wall Street. None has been with the firm for more than 20 years, and none has risen from within its vast private client group, Merrill's usual source for top managers. For all of them, starting with O'Neal, the idea of Mother Merrill as a nurturing bureaucratic womb is dead, according to top bankers at the firm. .
For the moment, analysts are cheering O'Neal and his number-crunchers. In the wake of the layoffs, profit margins are rising in important areas such as investment banking and the brokerage business. The company's stock price fell 27 percent in 2002, in line with other brokerage stocks, and closed Friday at $39.97 - 32 percent off its 52-week high. .
Other large Wall Street firms are increasing layoffs, a sign that they, too, are growing more concerned about the depths of the market's slide. .
"Although you worry that they may have cut too far, the fact that Merrill's competitors are throwing in the towel is a confirmation that O'Neal was right," said Guy Moszkowski, an analyst at Salomon Smith Barney Inc. "And while they have downsized at just about every level, they have kept their rainmakers." .
Still, many wonder how a bear-market Merrill will fare when equity markets rebound. Over the past year, many top dealmakers have left the firm, and Merrill has dropped to sixth place from third in worldwide merger advisory work. If O'Neal and his team are wrong about the length of the market's collapse, Merrill may well suffer - and require another redesign. NEW YORK In quick succession, just days after Stanley O'Neal took over as chief executive of Merrill Lynch Co. on Dec. 2, the firm announced several executive changes. .
G. Kelly Martin, a member of Merrill's executive committee, stepped down as president of the international private client business to pursue other interests. Michael Marks, chairman of its European, Middle East and African operations, retired. Paul Roy, co-president of the global markets and investment banking business, said that he, too, would leave the firm. .
Absorbing their portfolios were James Gorman, president of Merrill's brokerage network in the United States and a former McKinsey Co. executive who joined the firm in 1999, and Arshad Zakaria, Roy's co-president, who at 40 is now the youngest head of any big banking and securities division on Wall Street, the unit responsible for 60 percent of Merrill's profit. It happens all the time - a new chief executive names his own team, after all. But at Merrill, the bloodletting has actually been going on since O'Neal became president in July 2001, starting with the resignations, under pressure, of Jeffrey Peek, the head of asset management, and Thomas Davis, who had run the investment banking business. .
More important, it signals a cultural and management revolution unique in the firm's history. In contrast with its peers on Wall Street, Merrill, under O'Neal's iron grip, is ruled by the cold, hard view that the current gloom in the markets will not lift soon. .
Merrill, it seems, is no longer bullish on America.
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