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Wednesday April 22, 08:21 PM
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Morgan Stanley posts loss, slashes dividend
By Joseph A. Giannone
NEW YORK (Reuters) - Morgan Stanley posted its second straight quarterly loss on Wednesday and slashed its dividend as real estate investment losses and a debt-related charge wiped out gains from its trading businesses.
The investment bank and brokerage giant reported a net loss applicable to common shareholders of $578 million, or 57 cents a share, for the first quarter, compared with shareholder income of $1.31 billion, or $1.26 a share, in the comparable period last year.
Morgan Stanley also cut its quarterly dividend by 80 percent to 5 cents a share.
Analysts on average expected a loss of 9 cents a share, according to Reuters Estimates.
"We remain cautious," Chief Financial Officer Colm Kelleher said in an interview, though he stressed Morgan Stanley has more than enough capital and cash on hand to go back on offense.
"We're ready to go when we see the right risk-adjusted returns," he said. "We always saw 2009 as a year of transition, so we don't see it as a mortal sin being safe for an extra three months."
First-quarter revenue fell 62 percent to $3.0 billion, dragged down by two major losses.
Morgan, one of the largest commercial real estate investors in the world, recorded $1 billion of net losses on real estate and a $1.5 billion accounting loss on its own debt, reflecting the rising value of Morgan Stanley credit this year.
"People had expected the credit desk trading profits to be a pleasant surprise, and I think they were OK, but they were just overwhelmed by the negative surprises in the writedowns," said Michael Holland, founder of New York money management firm Holland & Co.
Morgan Stanley shares, which fell 9 percent in premarket trade, have fallen by half over the past 12 months. The stock has surged 54 percent this year, including a recent rally sparked by higher-than-expected profit at Goldman Sachs Group Inc and other banks.
