With shares cut nearly in half during the past year, anything short of the apocalypse was bound to come as good news for Merrill Lynch (NYSE: MER).

Brace yourself
First-quarter net income came in at a loss of around $2 billion, or $2.19 per share, down from a near mirror-image profit of $2.11 billion, or $2.26 per share, in the same period last year. Revenue sank an incredible 69% to $2.93 billion. Yowza. Shares jumped 4% after the news was announced Thursday morning.

During the quarter, Merrill wrote down more than $6 billion, pushing the total amount it has had to ax off its books to around $30 billion since the credit crunch began to unfold last summer. Nonetheless, Merrill claims to have $82 billion in excess liquidity and remains bent on weathering the storm.

Like many of its Wall Street neighbors, Merrill plans on cutting jobs to adjust to the sluggish market. Around 4,000 employees are expected to receive pink slips. Most of the cuts will come from Merrill's investment banking, global markets, and support divisions, and likely won't have much of an impact on its prominent broker division. The cuts are expected to bring a $350 million restructuring charge next quarter, but spur $800 million per year in savings after that.

CEO John Thain, a former Goldman Sachs (NYSE: GS) and NYSE Euronext (NYSE: NYX) executive, hinted that brighter days likely won't arrive for at least a few quarters. Rivals Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C), among others, have chopped off billions in assets from their books and raised massive amounts of cash to shore up shattered balance sheets. Merrill itself has loaded up with $12 billion in fresh capital since last fall. Thain said earlier this month that Merrill's war chest was hefty enough that the company doesn't need to raise more cash -- which can dilute existing shareholders' stakes. But he altered that a bit on Thursday, hinting at the possibility of issuing preferred shares in a similar manner to JPMorgan's (NYSE: JPM) recent $6 billion injection.

Buckle up
Investment banks have a seriously bumpy road ahead of them. After a decade of outsized returns, the reality of the credit problems is sinking in, stripping away some of the massive leverage that was once used as an easy-money tool to juice returns. Of course, the day will come when this credit hoopla will right itself, allowing Wall Street banks to get back on track. But just as Britney Spears learned the hard way, staging a comeback after a stumble can be a doozy.

For related Foolishness:

Fool contributor Morgan Housel doesn't own shares of any of the companies mentioned in this article. NYSE Euronext is a Rule Breakers newsletter recommendation and JPMorgan is an Income Investor pick. The Fool has a disclosure policy.