Like every other CEO of a financial services firm, Morgan Stanley (NYSE: MS) Chief Executive John Mack has had a rough year. Given today's poor earnings performance, investors have to wonder whether Mack will join the parade of CEOs of financial services classes who headed for the exits.The once-proud New York investment bank reported a loss of $2.29 billion, or $2.34 a share, for the fourth quarter. It was Morgan Stanley's first quarterly loss this year. Analysts surveyed by Bloomberg were expecting a 34 cent loss, according to Bloomberg News. It's three major business each showed double-digit earnings declines.
There was nothing to cheer about in these results. Here are some highlights:
- Net revenues were $24.7 billion, 12 percent below last year;
- Advisory revenues were $528 million, a 32 percent decrease;
- Underwriting revenues of $215 million, down 63 percent from last year;
- Equity underwriting revenues were $107 million, an 69 percent decrease;
- Fixed income underwriting revenues decreased 54 percent to $108 million;
- Fixed income sales and trading net losses were $1.2 billion, compared with net losses of $7.9 billion in the fourth quarter of last year;
Much has been made of the decision of Mack and his top lieutenants to forgo their bonuses. Mack, a Morgan Stanley lifer who has run the company since 2005 does not need the money. In 2006, Mack took home $40 million in stock and options, the largest bonus ever given to a Wall Street CEO -- at least for a while.
Shares of the once-proud New York-based bank have tumbled more than 70 percent this year. The share performance is comparable to the likes of Goldman Sachs Group Inc. (NYSE: GS) and Bank of America Corp. (NYSE: BAC). Morgan has also accepted $10 billion in funding from the TARP program.
Morgan Stanley may be too big to fail. But that does not mean it will thrive either. Pressure on Mack is bound to mount because Goldman seems to be holding up better. Its recent results were not nearly as poor. JPMorgan Chase & Co. (NYSE: JPM) also seems to be holding up well.
It will be surprising if Mack lasts the year.
Shares of the once-proud New York-based bank have tumbled more than 70 percent this year. The share performance is comparable to the likes of Goldman Sachs Group Inc. (NYSE: GS) and Bank of America Corp. (NYSE: BAC). Morgan has also accepted $10 billion in funding from the TARP program.
Morgan Stanley may be too big to fail. But that does not mean it will thrive either. Pressure on Mack is bound to mount because Goldman seems to be holding up better. Its recent results were not nearly as poor. JPMorgan Chase & Co. (NYSE: JPM) also seems to be holding up well.
It will be surprising if Mack lasts the year.
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