Morgan Stanley slammed by $9.4B US credit market writedown
Last Updated: Wednesday, December 19, 2007 | 4:21 PM ET
The Associated Press
Morgan Stanley, the No. 2 U.S. investment bank, on Wednesday reported a larger-than-expected fiscal fourth-quarter loss due to a $9.4-billion US writedown from its exposure to subprime and other mortgage-related investments.
The company also said China's government-controlled investment vehicle, China Investment Corp., has invested $5 billion US to help replenish its capital. And chairman and CEO John Mack said because of the poor performance, he would not take a bonus this year.
Morgan Stanley 3-month NYSE chart
"The writedown Morgan Stanley took this quarter is deeply disappointing — to me, to our colleagues, to our board and to our shareholders," he said. "Ultimately, accountability for our results rests with me, and I believe in pay for performance, so I've told our compensation committee that I will not accept a bonus for 2007."
Huge writedowns caused the ouster of Merrill Lynch & Co. CEO Stan O'Neal and Citigroup Inc. CEO Charles Prince.
Morgan Stanley said it lost $3.6 billion US, or $3.61 US per share in the fourth quarter, compared with a profit of $2.27 billion US, or $1.44 US per share, a year earlier. The investment house reported negative net revenue of $450 million US because of the writedowns, compared to revenue of $7.75 billion US a year ago.
Writedown grew
Morgan Stanley disclosed in November that it would be taking a charge of $3.7 billion US because of losses in credit market investments. But the total for the quarter grew by an additional $5.7 billion US, Wednesday's report showed.
The $9.4 billion US worth of writedowns reduced earnings by $5.80 US per share in the fourth quarter.
Results broadly missed Wall Street projections for a loss of 39 cents per share on revenue of $4.23 billion US , according to analysts polled by Thomson Financial.
The company also took a $1.2 billion US writedown in the third quarter.
Morgan Stanley shares rose $2.01 US to end at $50.08 US on the NYSE.
Share Tools
Top News Headlines
- Raitt closer to ending CP Rail strike
- Labour Minister Lisa Raitt is prepared to end the Canadian Pacific Rail strike if necessary, after both CP Rail and the union rejected a proposal for voluntary arbitration by the government-appointed negotiator on Sunday. Raitt tells CBC News she is "extremely disappointed." more »
- Syrian regime denies role in Houla massacre
- The UN Security Council condemned the Syrian regime at an emergency meeting Sunday, holding president Bashar al-Assad's military responsible for the massacre of more than 100 people, dozens of whom were children younger than 10 years old. more »
- Ryder Hesjedal wins prestigious Giro d'Italia
- Victoria, B.C., native Ryder Hesjedal has become the first Canadian to win one of the cycling world's three Grand Tour events, wrapping up the 2012 Giro d'Italia with an excellent performance in the final stage in Milan. more »
- Neighbour may have helped find missing kids in Mexico
- Two Winnipeg children who had been missing for nearly four years were found in Mexico after a man raised concerns about his neighbour, according to a private investigator. more »
Latest Business Headlines
- Bankia asks Spain for €19B
- The board of directors of Spain's troubled bank, Bankia, has asked the Spanish government for €19 billion ($24.5 billion Cdn) in financial support. more »
- EI reforms aim to boost employment, Flaherty says
- Finance Minister Jim Flaherty defended his government's proposals to change employment insurance, saying the aim is to remove "disincentives to employment." more »
- Employment Insurance review boards to be scrapped
- The federal government is scrapping two review boards used by people appealing decisions made about their employment insurance. more »
- Ottawa moves to limit foreign investment reviews
- The federal government is raising to $1 billion the amount of foreign money that can go into a Canadian company before the investment is reviewed. The review has been used in the past to block foreign takeovers of MDA and Potash Corp. more »
Lang & O'Leary Exchange
Markets
| Index | Last Trade | Change |
|---|---|---|
| TSX COMPOSITE | 11576.47 | 10.4 |
| DOW | 12454.83 | -74.92 |
| NASDAQ | 2837.53 | -1.85 |
| SP 500 | 1317.82 | -2.86 |
| NYSE COMPOSITE | 7534.32 | -18.01 |
| AMEX | 2227.37 | 1.45 |
| TSX-VENTURE | 1309.27 | 26.8 |
The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.
Business Features
- Teen struck by lightning in Ottawa dies
- Missing Winnipeg children found in Mexico
- Quebec tornadoes cause millions in damage
- Syrian regime denies role in Houla massacre
- Montreal protesters march in peaceful defiance
- Woman's remains found in hockey bag on Cape Breton river
- Remains found in bag on Cape Breton river ID'd
- Everest team unable to bring down Toronto woman's body
- WWE apologizes to Brazil over Canadian's flag stomp
