Morgan Stanley: Financial Winner, Again

May estimates that Morgan Stanley will earn 90 cents a share for 2012, followed by earnings of $1.90 a share in 2013.

Morgan Stanley currently holds 51% of the Morgan Stanley Smith Barney Joint Venture, with Citigroup (C) holding the remaining 49%. Morgan Stanley has the option to purchase the remaining stake in the joint venture over a three year period beginning this year, and in May announced plans to purchase an additional 14% stake, subject to a valuation that will be determined by Perella Weinberg Partners LP, with an extended deadline of Sept. 10.

The formation of the joint venture benefited Citigroup immensely during the second quarter of 2009, when the company sold its Smith Barney subsidiary to the joint venture and booked a gain of $11.1 billion, shoring up its capital, while the company was still suffering tremendous credit losses.

Analysts are expecting Citigroup and Morgan Stanley to compromise on the joint venture's valuation, leading to a third-quarter write-down for Citi, likely ranging between $3 billion and $4 billion.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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