As talks to sell off a chunk of asset manager BlackRock unraveled, it seems Merrill Lynch still stands to make roughly $4.5 billion off the sale of its 20% stake in news and data provider Bloomberg. While the pecuniary shot in the arm is, no doubt, a welcome development, are market observers correct in that these moves are primarily meant to offset a $1.91 a share loss the bank is predicted to post?

Fresh capital is within reach for Merrill Lynch & Co., as the Wall Street firm reached a deal to sell its stake in media giant Bloomberg LP. However, parallel negotiations to sell a piece of asset manager BlackRock Inc. fell apart.

The Bloomberg sale, expected to fetch about $4.5 billion, is good news for Merrill, which Thursday is expected to announce write-downs of billions of dollars in mortgage-related assets and report its fourth straight quarterly loss. The firm is selling its 20% stake in the news and data provider to its corporate parent Bloomberg Inc.

Still, what has Wall Street buzzing is that Merrill isn't, as some had expected, selling all or even part of its 49% stake in BlackRock, a strategic investment valued at more than $10 billion that provides Merrill with a steady income stream.

Merrill's decision to try and sell these stakes has been widely telegraphed as the firm is seeking capital to offset the $1.91 a share loss it is predicted to post. This compares with a profit in the year-ago quarter of $2.10 a share.

Write-downs are expected to top $6 billion. It is possible the company Thursday or in the coming weeks will announce further asset sales aimed at raising additional capital.

The BlackRock negotiations bogged down over a series of issues, say people familiar with the matter. While Merrill wanted to reduce its stake, BlackRock was keen on keeping Merrill as a tight, strategic partner. But doing both those at the same time created a host of accounting and tax issues, these people said.

After days of negotiations, it became clear that a transaction wasn't possible. These people don't expect the two sides to reopen talks in the near future. Neither firm commented on the negotiations.

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