Morgan Stanley’s quarterly profit falls 60%

Jun.18, 2008 in Market Outlook

Morgan Stanley’s quarterly profit off 60%

By Greg Morcroft, MarketWatch

Last Update: 6/18/2008 8:57:00 AM

NEW YORK (MarketWatch) — Morgan Stanley, the third U.S. investment bank to
report financial results this week, said Wednesday second-quarter profit fell 60%
as continued weakness in key businesses reflected the ongoing credit crunch as
well as the falling real-estate market.

The company (MS) reported net income of $1.03 billion, or 95 cents a share, for
the three months ended May 31, down from $2.58 billion, or $2.45 a share ago,
earned in the year-earlier second quarter.

The company’s revenue in the quarter fell 38%, retreating to $6.51 billion from
$10.5 billion a year ago.

Quarterly weakness was concentrated in Morgan Stanley’s investment-banking and
asset-management operations, the company said.

Analysts polled by Thomson Reuters had expected Morgan Stanley to report a profit
of 95 cents a share on revenue of $7.05 billion.

“Given the turbulent environment this quarter, we stayed close to shore and
continued strengthening the firm’s capital and liquidity positions,” said Chief
Executive John Mack said in a press release.

The company noted that during the latest quarter, it grew its capital and
liquidity positions, while trimming total leverage.

Morgan Stanley, like most financial firms over the last year, has been selling
assets and raising capital to offset huge declines in their riskiest debt and
real-estate exposures as the credit crisis wreaks ongoing havoc on balance
sheets.

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