Morgan Stanley (MS) Earnings: Results Only A Mother Could Love

Morgan Stanley’s (MS) stock fell 5% the moment it released its earnings for the last quarter. The firm was lucky that the drop did not become a plunge.

Morgan reported a loss from continuing operations applicable to Morgan Stanley for the second quarter  of $159 million, or $1.37 per diluted share  compared with income from continuing operations applicable to Morgan Stanley of $689 million in the period last year.

Net revenues for the quarter were $5.4 billion, compared with $6.1 billion in last year’s second quarter.

Some of the highlights of the quarter included fixed income sales and trading net revenues of $1.0 billion reflect a loss of $1.3 billion related to the tightening of MS debt-related credit spreads which was partly offset by strong results in investment grade and distressed debt trading.

Equity sales and trading net revenues of $0.7 billion reflect a loss of $0.8 billion related to the tightening of MS debt-related credit spreads. Asset Management results reflect losses in the Merchant Banking business, primarily driven by real estate. The firm’s results reflect net losses on investments in real estate of $0.7 billion, amidst the industry-wide decline in this market.

Douglas A. McIntyre