Morgan Stanley’s Profits Jump 49%

The profits continue for the brokerage firms. Today Morgan Stanley (MWD) reported a 49% increase in its third–quarter earnings.

Net income for the three months ended Nov. 30 increased to $1.79 billion, or $1.68 a share, from $1.2 billion, or $1.09, a year earlier, Morgan Stanley said today in a statement. The firm repatriated $4 billion in foreign profit, boosting net income by 26 cents a share. Revenue climbed to $6.96 billion.
“It’s been a very good environment for trading,” Jordan Posner, a money manager at Matrix Asset Advisors, said before the results were released. Posner helps oversee $1.9 billion, including shares of Morgan Stanley.
Morgan Stanley is recovering from a corporate-governance battle that led to the June ouster of former Chief Executive Officer Philip Purcell. The new CEO, John Mack, urged Morgan Stanley traders to make bigger bets with the firm’s own capital and target more business from the booming hedge fund industry.
Shares of Morgan Stanley rose $1.03 cents to 48.53 euros, or about $57.97, in German trading before U.S. stock markets opened. The stock closed down 21 cents at $56.67 on the New York Stock Exchange yesterday.
Earnings Surprise
Kenneth Worthington of CIBC World Markets, who’s considered one of the most accurate analysts following New York-based Morgan Stanley, expected net income to drop 8.5 percent to $1.1 billion, or $1.04 a share. The average estimate in a Thomson Financial poll of 17 analysts was $1.08 a share.
Revenue at Morgan Stanley’s institutional securities unit, which includes stock and bond underwriting, sales and trading and merger advisory work, rose 47 percent to $4.15 billion, according to the statement. In fixed-income trading, Morgan Stanley had revenue of $1.6 billion, up 79 percent.
Morgan Stanley’s retail brokerage, which caters to individual investors, increased revenue by 21 percent to $1.3 billion. The firm’s asset-management unit had revenue of $890 million, up 25 percent.
Discover, the credit card business that Mack, 61, decided to keep after rejecting a spinoff plan proposed by Purcell, posted $694 million in revenue, down 24 percent. The firm cited a “spike” in bankruptcy filings in advance of a new federal law making it harder for consumers to cancel debts.

Posted by on December 20th, 2005 at 10:43 am


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