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Largest US Brokerage Firm Makes Deep Cuts in Workforce - 2002-01-09

The United States' largest brokerage firm Merrill Lynch announced Tuesday that it will cut nearly 15 percent of its work force.

The year 2002 is starting on something of a sour note for New York-based brokerage firm Merrill Lynch. The company says that it will cut 9,000 jobs some 15 percent of its total work force.

These new reductions come close on the heels of last year's cost-cutting measures, which claimed at least 6,000 jobs. The company says the cuts will save the firm about $1.4 billion annually, and are necessary in light of decreased fourth-quarter earnings. The cuts will result in a pretax charge of $2.2 billion against Merrill Lynch's earnings in that quarter.

Even so, Merrill Lynch stock is trading higher Wednesday on the New York Stock Exchange. Analyst Amy Butte of Bear Stearns explains why.

"People are saying, 'Hey, we have a catalyst for earnings growth/acceleration,' and that's what people are buying into. You also have a new management team that is focused on the bottom line rather than on simply expanding the global footprint. Those are the things that people are watching," she said.

These days, Merrill Lynch will take good news wherever it can find it. Like most other brokerage firms, it has suffered at the hands of persistent and pervasive uncertainty on Wall Street in the wake of the September 11 terrorist attacks.

Of the 9,000 jobs cut, approximately half are from overseas, and are connected to the firm's scaling back of its operations in Japan and Canada.