"We've been whipsawed," said Wayne Bopp, analyst at Fifth
Third Investment Advisors.
Morgan Stanley also disclosed it reached a preliminary
agreement with the New York Stock Exchange over failure to
comply with prospectus delivery rules, employee misuse of funds
and other matters. The NYSE confirmed the company will pay a
$19 million fine, face censure and offer rescission to some
customers.
_____Earnings Watch_____
•
Morgan Stanley Profit Drops, Shares Fall (Reuters, Sep 22, 2004)
•
FedEx Earnings More Than Double (Reuters, Sep 22, 2004)
•
Morgan Stanley Profit Falls, Shares Drop (Reuters, Sep 22, 2004)
•
FedEx Growth Doubles in First Quarter (Associated Press, Sep 22, 2004)
•
FedEx Quarterly Earnings More Than Double (Reuters, Sep 22, 2004)
•
More Earnings News
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POOR RESULTS
Alone among its peers, Morgan Stanley reported the kind of
poor results widely projected by analysts. Market data this
summer indicated low volatility, thin trading volumes and a
drop off in underwriting activity.
Total revenue rose 3 percent to $5.4 billion from last
year, lagging its rivals and below Wall Street forecasts.
Revenue from institutional securities businesses was down
30 percent from last year, while Morgan Stanley's retail
brokerage business posted a 7 percent decline.
Meanwhile, operating expenses rose 23 percent to $4.14
billion, with both compensation and non-compensation costs
sharply higher. Morgan Stanley attributed some of the increase
to changes made in stock-based compensation, which reduced
year-ago costs by $519 million.
Morgan Stanley also reported a $42 million pretax loss
after it marked down the value of 18 airplanes it plans to sell
from its aircraft-leasing business. Sidwell said the write-down
of roughly 10 percent of its fleet reflects the lower market
value of aircraft.
Investment banking business made some gains during the
quarter, with Morgan Stanley maintaining lead rankings in
equity and equity-linked underwriting and in global initial
public offerings. Still, banking income fell 20 percent to $783
million as the overall market shrank.
The Discover credit card business reported its lowest loan
losses in three years, helping earnings rise 13 percent to $330
million from last year. Asset management revenue was little
changed, though assets under management increased 18 percent to
$510 billion.
Morgan Stanley shares were down $2.93, or 5.6 percent, to
$49.48 in midday trade on the New York Stock Exchange.
