Dividend.com: Morgan Stanley Shreds Div

Morgan Stanley Posts $578 Million Loss, Slashes Dividend

Shares of financial services giant Morgan Stanley (MS) receded Wednesday morning, on the heels of the company's larger-than-expected first-quarter loss.

The New York-based bank said late Tuesday that it lost $578 million, or 57 cents per share, during the fiscal first quarter. This compares to a profit of $1.3 billion, or $1.26 per share in the year-ago quarter. These latest results badly missed expectations. On average, Wall Street analysts expected the company to report a loss of 8 cents per share.

Because of a shift to a traditional calendar quarter, Morgan also reported December 2008 results separately, saying it lost a staggering $1.6 billion in that month alone.

Morgan said that the first-quarter results included a $1 billion loss from real estate investments, and a $1.5 billion loss because the value of its debt ballooned as the company's creditworthiness increased. CEO John Mack said that "Morgan Stanley would have been profitable this quarter if not for the dramatic improvement in our credit spreads -- which is a significant positive development, but had a near-term negative impact on our revenues."

In perhaps the biggest news to come out of the earnings report, Morgan said that it is slashing its quarterly dividend by over 81 cents, from 27 cents per share to 5 cents.

Morgan Stanley shares fell more than 8% after hours Tuesday, but pared some of those losses by Wednesday morning, when shares were trading down $1.66, or -6.7%.

We removed shares of MS from our "Recommended" list back on Aug.12, when the stock traded at $45.39. The company has a .81% dividend yield, based on last night's closing stock price of $24.65.