Yesterday was a rather odd day in more than one way. The reaction to Goldman Sachs Group (NYSE: GS) was given a warm reception, despite the much wider losses than expected, the negative revenues after items, and the mark-downs. This morning, Morgan Stanley (NYSE: MS) came out with much of the same sort of news with wider losses, etc… Yet there is no mercy, no applause, and not even a Swiss-themed neutrality nor indifference.
Morgan Stanley is getting the cold shoulder from Wall Street thismorning. The broker-turned-banker posted a loss of $2.37 billion forthe quarter. The loss is -$2.34 EPS rather than the expected FirstCall loss estimate of -$0.34. Yep, a $2-handle loss rather than aslight $0-handle loss.
The broker took writedowns and losses. Fixed income lost $1.2 billion,yet this is much lower than last year because it now has lower mortgageexposure. It took another $1.1 billion in charges from trading andother sales losses and $1.8 billion in real estate fund losses.
Amazingly enough, the firm was able to post a profit for the full yearjust like its cousin Goldman Sachs did yesterday. Morgan Stanleyshares are down 4% at $15.45 in pre-market trading.
Jon C. Ogg
December 17, 2008