To lose $5 billion on the subprime collapse is bad enough. To discover several weeks later that you have lost several billion dollars more seems like carelessness.

Merrill Lynch reported today that it is taking $7.9 billion in write-downs on credit investments, up from the roughly $5 billion it estimated on October 5. As a result of the write-downs, the firm swung to its first loss since 2001.

"This is a bloodbath for certain," Bill Fitzpatrick, an analyst with Johnson Family Funds in Racine, Wisconsin, told Reuters. "It speaks very poorly of Merrill's risk-management practices."

For the quarter, Merrill had a loss of $2.3 billion, or $2.85 per share, from continuing operations, compared with a profit of $3 billion, or $3.14 per share, in the quarter a year ago. Net revenue, or revenue after interest expenses, tumbled 94 percent, to $577 million. The results fell well short of analysts' forecasts.

Speculation about a bigger write-down started on Friday, sparking heavy trading in shares of Merrill. The deterioration of the market for securities tied to subprime mortgages and for collateralized debt obligations has, in the words of an anonymous Merrill executive quoted by the New York Post, "kept the blood on the page."

Stan O’Neal, the chief executive of Merrill, said in a statement: "In light of difficult credit markets and additional analysis by management during our quarter-end closing process, we re-examined our remaining C.D.O. positions with more conservative assumptions. The result is a larger write-down of these assets than initially anticipated.

"We expect market conditions for subprime mortgage-related assets to continue to be uncertain, and we are working to resolve the remaining impact from our positions," he added.

The additional write-down is sure to put pressure on O'Neal, who has been chief executive since 2002, to make changes. As the New York Times notes, O'Neal has in recent years pushed the firm to get into riskier businesses, including mortgages.

Already there has been a purge of Merrill's fixed-income management ranks, and more may be to come.

The Wall Street Journal says that a shakeup may pave the way for Laurence Fink, the chief executive of BlackRock, to take on a greater role at Merrill, which acquired a 50 percent stake in the investment management firm.