Merrill Lynch shakeup won't revive moribund shares

By Dan Wilchins - Analysis

NEW YORK (Reuters) - Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) ousted its chief executive, but that won't be enough to revive its battered shares, portfolio managers said.

The successor to Merrill Lynch's Stan O'Neal may well start off by taking big write-downs on any remaining assets whose recorded price on the balance sheet is in any way questionable, portfolio managers said.

"Whoever comes in will want a clean slate," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon, which owns Merrill Lynch shares.

Merrill Lynch, the largest U.S. brokerage, still has to figure out whether past strategic steps were fundamentally flawed or simply poorly executed, portfolio managers said.

Merrill Lynch sent O'Neal packing after suffering the biggest quarterly loss in its history. It is unclear who will replace him permanently.

Any further writedowns would also mean declines in book value, a measure of the value of a company equal to assets minus liabilities. When book values decline, or are expected to fall, share prices often follow suit.

Merrill shares have fallen about 30 percent this year, compared with a 3.6 percent decline for the Amex Securities Broker Dealer .XBD index.

Merrill Lynch last week said its book value was $39.75 a share, the lowest level since the second quarter of 2006.