Morgan Stanley reported a 57% drop in net income for the second quarter of fiscal 2008, due largely to weakening performance in its investment banking division and credit losses. Net revenue declined 38%, despite earning $1.43 billion from the sale of its Spanish wealth management division and its stake in MSCI Inc. (1)
On Monday, June 2, 2008, Standard & Poor's cut its credit rating for Morgan Stanley to A+ from A--. The possibility of continued writedowns on some of Morgan Stanley's assets prompted the S&P downgrade.
On February 4th, JP Morgan Chase, Citigroup, and Morgan Stanley stated that they would put into effect a set of "Carbon Principles" by which they would give investment priority to clean energy groups, and force any company planning to build coal-powered plants to show how they would deal with the carbon dioxide pollution in order to get investment money.
MS announced write-downs of $9.4 bn on subprime-backed securities, leading to a quarterly loss of $3.59 bn, the first in the firm's 72-year history.
An analyst at Goldman Sachs lowered his target price for Morgan Stanley's stock to $61 from $66, citing its exposure to conditions in the credit markets as a reason for the cut. Morgan Stanley's stock price fell 3.4% over the course of the day.
An analyst at Fox-Pitt Kelton stated on November 6 that subprime-related write-offs at Morgan Stanley could total up to $6 billion, fueling concerns about the impact of the subprime industry on major Wall Street firms.
On November 1, Citigroup announced further potential write-downs on subprime-related holdings, in addition to the $6 billion included in its third-quarter earnings report. This move led to speculation about the extent of other financial firms' exposure to subprime fallout, sending stocks in the sector downward.
On September 19, 2007, Morgan Stanley announced its third-quarter results for the year. As a result of market turbulence and devaluations related to the subprime crisis, net income fell 16% to $1.54 billion from $1.85 billion in the same quarter in 2006.
In a deal worth $1.1 billion, Morgan Stanley announced its plan to team up with Sunrise Senior Living, Inc (SRZ) to purchase and operate 15 assisted living communities throughout the U.K.
The Financial Industry Regulatory Authority (FINRA) fined Morgan Stanley $6.15 million in response to charges that the firm overcharged retail brokerage customers for certain corporate bonds. Of this amount, $1.5 million was a direct fine, while FINRA also ordered Morgan Stanley to reimburse $4.65 million to customers.
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