Morgan Stanley Dean Witter

( MWD) became the latest financial services giant to report stellar earnings, after it easily beat Wall Street expectations Thursday with a 49% rise in net income for its fiscal first quarter.

Morgan Stanley's better-than-expected performance puts the company among the ranks of

Goldman Sachs

(GS) - Get Report

, which reported a 67%

increase in first-quarter earnings, and

Lehman Brothers

( LEH), whose earnings more than

doubled for the quarter. Lehman also easily beat estimates.

Morgan Stanley, the No. 2 U.S. securities firm, reported net income of $1.544 million for the quarter ended Feb. 29, up 49% from $1.037 million the prior year.

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That increased the company's diluted earnings per share to $1.34 a share, a 52% increase from the 88 cents a share it reported in the prior year. Analysts polled by

First Call/Thomson Financial

had forecast $1.06 per share.

The results fell just short of fourth-quarter 1999, when Morgan Stanley reported record profits of $1.6 billion, or $1.42 per share.

But despite the strong results, Morgan Stanley's share fell 2 3/16, or 3%, to 87 7/16 in morning trading.

Morgan Stanley said its earnings were driven by broad strength in many of its businesses including stock and debt underwriting, mergers and acquisitions, and securities trading.

"We continue to benefit from the strength and diversity of our revenue streams, with record results in equity sales and trading, individual securities and asset management," said chairman Philip J. Purcell and president John J. Mack in a joint statement.

Total revenues for the quarter grew by 39%, to $7.4 billion

One of the strongest contributors to Morgan Stanley's results was the New York-based company's securities division, which got a strong boost from the booming environment for stock trading and public offerings. The securities business posted net income of $1.2 billion, up 54% from first-quarter 1999, as revenues for the unit rose 45% to $5.9 billion.

The company also said that its

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credit card business saw an 18% increase in revenues, to $889 million from $752 million the prior year. Its asset management business also saw an 18% rise in revenues to $600 million from $509 million the prior year.