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.
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