Morgan Hurt by Weak Trading Revenue - TheStreet



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Morgan Stanley

(MS) - Get Report

posted fourth-quarter earnings that fell short of analyst expectations as trading revenue fell 54% from the third quarter.

Morgan Stanley shares were rising slightly in pre-market trading, however, as tepid results from

JPMorgan Chase

(JPM) - Get Report



(C) - Get Report

seem to have lowered Wall Street's expectations for the financials. The stock tacked on nearly 1% to $31.46 in recent trades.

On a continuing operations basis, Morgan Stanley earned $413 million, or 14 cents per share for the fourth quarter. Including discontinued operations, such as the results of MSCI Inc. and the company's retail asset management unit, the company posted a profit of $617 million, or 29 cents a share, in the period. Revenue totaled $6.8 billion for the latest quarter.

The average estimate of analysts polled by

Thomson Reuters

was for earnings of 36 cents a share in the December period on revenue of $7.81 billion.

In the same period a year earlier, Morgan Stanley lost $10.53 billion, or $10.92 a share, on a continuing operations basis with results weighed down by negative revenue resulting from credit spread fluctuations due to the market turmoil at the end of 2008.

The shortfall in the latest quarter appeared to come from trading, an area that also tripped up Citigroup and JPMorgan. Morgan Stanley's trading revenues for the quarter were $1.7 billion, compared to $3.9 billion in the third quarter -- a 54% decline. Sandler O'Neill analyst Jeff Harte, who forecast earnings of 22 cents a share for the period, had predicted a 32% decline in trading revenues.

Also, non-interest expenses rose sharply from last year, going to $6.2 billion in the quarter from $2.3 billion in the same period a year earlier. The increase was entirely attributable to compensation costs, which totaled $3.8 billion. Non-compensation expenses actually fell 18% year-over-year for the period.


Written by Dan Freed in New York