Tuesday, November 27, 2012

Morgan Stanley Misses Q2 Estimates, Shares Drop

Morgan Stanley (NYSE:MS) said today that it earned $591 million during its second quarter, down 50% from $1.19 billion during the same time last year. EPS came in at 29 cents. Revenue for the quarter dropped 24% to $6.95 billion.

The results disappointed analysts who had predicted revenue of $7.7 billion and EPS of 43 cents, The Wall Street Journal noted.

Don’t Buy Into Big Banks’ Hooey

Investors weren’t happy either. Morgan Stanley shares fell about 5% in Thursday morning trading.

The company was hit with a two-notch credit downgrade — from A2 to Baa1 — by Moodys last month, forcing it to post $2.9 billion in collateral to its creditors, partners and exchanges. Total increases in collateral resulting from the credit downgrade could hit $6.3 billion, the bank said.

Morgan Stanley reported that during the quarter, it saw a 37% drop in revenue from its institutional securities business, which generated $3.23 billion. Its fixed-income trading business saw an even worse decline, falling from 2011 revenue of $1.9 billion to just $770 million in the second quarter.

The bank’s equities trading business also contracted from revenue of $1.8 billion last year to $1.1 billion during the past quarter.

Earlier this week, Goldman Sachs (NYSE:GS) topped Wall Street forecasts even though its�second-quarter net income fell 11% to $962 million, compared to the same time last year.

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