Bloomberg News
The first reductions came Friday when the nation's biggest brokerage reduced the number of regional districts to 19 from 26 and reassigned their directors.
With the move "we will streamline our management structure and achieve some efficiencies," said a June 23 memo from James Gorman, chief of Merrill's retail branch offices and Mr. O'Neal's recently appointed No. 2. He announced the changes to Merrill's 14,400 U.S. brokers on an internal broadcast system.
The move came four months after Mr. O'Neal, an investment banker by training, became the first nonbroker to head Merrill's force of financial consultants. He considers Merrill's ratio of 1.5 support people per broker too high.
Merrill, which has 18,000 brokers worldwide, told investors last month that it aims to boost pretax margin - a profitability measure based on income before taxes as a percentage of total revenue - to 24% from 18%. The company expects 1.5 percentage point of the increase to come from its retail brokerage unit.
The New York securities firm is expected to announce several hundred job cuts in coming weeks, a person familiar with the firm said. A spokesman for the firm declined to comment.
Analysts said they anticipate many of these cuts will come in Merrill's Princeton, N.J., office, where the brokerage is based.
Mr. O'Neal overhauled management a month ago, elevating Mr. Gorman, a former McKinsey & Co. consultant who worked with Merrill through the 1990s, to the No. 2 spot.
Having two nonbrokers at the top of Merrill's flagship division - a first for the 115-year-old firm - underscores its push to meet new profit targets.
Mr. O'Neal's appointment in February and the ensuing changes came as traditional retail brokerage adjusts to competition from discount competitors like Charles Schwab Corp. and from Internet brokers like E-Trade Group Inc.
In the last year Merrill introduced a no-frills, $29.95-per-trade online brokerage account as well as an account that offers unlimited Internet trading along with a broker's advice for a minimum annual fee of $1,500.
