Countrywide loses in third quarter

Countrywide Financial Corp. lost $1.2 billion in the third quarter, but its shares soared Friday after the nation’s largest mortgage lender said it expects to be profitable this quarter and next year.

It was Countrywide’s first quarterly loss in 25 years.

But the Calabasas, Calif.-based company said it will be profitable in the fourth quarter and in 2008, as it restructures its business to take advantage of the current market.

“We continue to be bullish about the long-term prospects of both Countrywide and our industry,” Chairman and Chief Executive Angelo Mozilo said during a conference call with Wall Street analysts.

Shares jumped $4.23, or 32.4 percent, to close at $17.30 on Friday after rising as high as $17.51. The stock is down 64 percent from its 52-week high of $45.26.

The loss for the third-quarter came as mortgage market woes forced Countrywide to set aside millions in loan-loss provisions and writedowns, and the lender originated fewer loans.

Countrywide’s loss amounted to $2.85 per share for the July-September period in contrast to a profit of $647.6 million, or $1.03 per share, a year ago.

Analysts polled by Thomson Financial, on average, forecast a loss of $1.28 per share for the quarter.

Merrill Lynch & Co. Chief Executive Stan O’Neal faced the potential loss of his job Friday over questions about his leadership of the world’s largest brokerage – and he may face a revolt led by former top executives calling for his ouster.

Shares of the company had their biggest jump in five years Friday as speculation swirled that O’Neal’s job was on the line. He lost the confidence of investors earlier in the week after Merrill posted a $2.24 billion third-quarter loss – the biggest amount in its 93-year history.

In the face of reports that O’Neal angered Merrill Lynch’s board by initiating merger talks with Wachovia Corp. without their knowledge, there is growing sentiment on Wall Street that his days are numbered.

“I wouldn’t be surprised if we didn’t get some kind of announcement this weekend, that either the board is standing behind O’Neal or that he’s out,” said Dick Bove, an analyst with Punk Ziegel & Co. “And, if there’s no announcement soon, then Merrill Lynch could become a snake pit similar to what happened at Morgan Stanley.”

In 2005, dissident Morgan Stanley shareholders revolted against then-CEO Philip Purcell as the investment bank’s business and shares were struggling. It led to the dramatic return of John Mack, who was formerly the company’s president.

Win Smith, whose father was among Merrill Lynch’s founders, has renewed his criticism of Merrill’s leadership in recent weeks. He lost out to O’Neal for the top job, and is considered to be a potential replacement should he be fired.

Apple Inc.‘s delayed update to the Mac OS X operating system is hitting store shelves as consumers are increasingly snapping up Macintosh computers to complement their iPods and iPhones.

Dubbed Leopard, the upgrade went on sale at 6 p.m. local time Friday at stores around the world. It offers improvements to an operating system that already was widely praised for its ease-of-use and slick interface.

Leopard boasts more than 300 new features, including one called “Boot Camp” that lets users install Windows on Macs, though both operating systems can’t run at the same time. “Time Machine,” an automated data backup system, and “Spaces,” a way to simultaneously view open applications, are among the other highlighted features.

Macs have reached record sale levels, and the launch of Leopard is expected to bolster a continuing rise.