Merrill Lynch & Co. Chief Executive Officer John Thain, battered by $19 billion of losses, vowed last week to maintain the firm’s 35-cent quarterly dividend. The options market doesn’t believe him, Bloomberg reports.
“The market is pricing in a significant cut, roughly 50% or more,” says Steve Sosnick, who trades options at Interactive Brokers Group Inc. in Greenwich, Connecticut, which handles a seventh of global equity options trading.
A reduction would be Merrill’s first since it went public in 1971 and represent another reversal for Thain, 53, who told analysts he had plenty of capital two weeks before last month’s record $9.8 billion stock offering. The sale lifted the burden of quarterly payouts by boosting shares outstanding by half.
The full story is available at the Bloomberg web-site.