After all the poor result proves the market manipulation from a different angle and also shows how overrated all this mangers are at Wallstreet as we also can see with Citi which is run bby Pandit who was also a candidate tu run MS - both use those jobs anyway to fill their own pockets as Mack the current CEO of MS was supporting Clinton to get the next Treasury secretary for the same reason which motivated Paulson to take the post. As I have written in earlier posts a law allows the Secretary to sell all his stocks without any taxation to exclude any conflicts of interest. Which is very ironic as Paulson saved or made about 200 mil through that and still kept working for Goldman's interest.
Morgan Stanley Quarterly Loss Misses Estimates on Debt Costs
By Christine Harper
July 22 (Bloomberg) -- Morgan Stanley reported a third straight quarterly loss, worse than analysts estimated, as costs to repay the U.S. government and charges from an improvement in the firm’s own debt overwhelmed revenue.
The second-quarter loss from continuing operations was $159 million, or $1.37 a share, compared with earnings of $689 million, or 61 cents, in the same period a year earlier, the New York-based company said today in a statement. The average estimate of 19 analysts surveyed by Bloomberg was for a 54-cent loss. The results include a $2.3 billion accounting charge related to an improvement in the firm’s own debt.
Chief Executive Officer John Mack raised $6.9 billion by selling stock in the quarter, paid $10 billion and an $850 million dividend to the U.S. government, and took control of Citigroup Inc.’s Smith Barney brokerage division. The firm failed to make a profit, even as rising stock and bond markets during the quarter fueled profits at competitors, including record earnings of $3.4 billion at Goldman Sachs Group Inc.
“If there was ever a time when these banks should exceed on the upside in terms of their results, it should be now,” said Matt McCormick, a banking-industry specialist at Bahl & Gaynor Inc. in Cincinnati, which manages $2.3 billion, before the results. “Like it or not, many people are comparing them to the banks that came out with strong results and saying, ‘Why can’t they be more like Goldman?’”
Morgan Stanley shares have climbed 72 percent this year to close yesterday at $27.56 in New York trading after the stock plunged 70 percent in 2008. In two stock offerings in May and June, the company increased the number of shares outstanding to 1.4 billion from 1.1 billion at the end of March.
The difference between the yield on Morgan Stanley’s bonds and U.S. Treasuries, known as the spread, has narrowed in 2009 as investors became more comfortable lending to the company. The spread on $4.5 billion of 6.625 percent senior unsecured bonds that mature in 2018 dropped to 209 basis points yesterday from 465 basis points at the end of March. A basis point is one- hundredth of a percentage point.
Goldman Sachs and Morgan Stanley were the two biggest U.S. securities firms before converting to banks in September, furnishing them with the protection of the Federal Reserve in the wake of Lehman Brothers Holdings Inc.’s bankruptcy. Both firms changed their fiscal years to end in December instead of November.
While Goldman Sachs CEO Lloyd Blankfein, 54, has stuck to a strategy of making trading bets and investments with the firm’s own money, Mack, 64, has reduced Morgan Stanley’s risk-taking, scaling back principal investing and proprietary trading. Goldman Sachs reported record second-quarter revenue and earnings, driven by trading and stock underwriting revenue at an all-time high.
Earlier this week Morgan Stanley replaced Robert Hoornweg, 41, as global head of interest rates, credit and currencies with Jack DiMaio, 42, a former Credit Suisse Group AG executive who had founded a hedge fund.
Morgan Stanley paid $2.75 billion in cash during the quarter to complete its joint venture with Citigroup’s Smith Barney at the end of May. The deal gives Morgan Stanley control of a new Morgan Stanley Smith Barney brokerage division, which had about 18,500 advisers on June 1.