From the May 2008 issue of Research Magazine • Subscribe!

Morgan Stanley Posts Results

Morgan Stanley has reported income for the quarter ending February 29, 2008, of $1.6 billion, down from $2.3 billion a year earlier. Net revenues were $8.3 billion, about 15 percent below last year's first quarter.

The global wealth management group, led by James Gorman, had pre-tax income for the first quarter of $254 million, a 12 percent year-over-year increase. The quarter's pre-tax margin was 16 percent.

The group also reported net revenues of $1.6 billion, up 6 percent from a year ago. Total client assets stood at $722 billion, a 5 percent increase from last year's first quarter. Client assets in fee-based accounts were $185 billion, an 8 percent decrease from a year ago; they represent 26 percent of total assets.

The firm's 8,456 financial advisors had average annualized revenue of $761,000 and total client assets per representative of $85 million. In the previous quarter, ended November 30, 2007, Morgan Stanley's 8,429 FAs had average annualized revenue of $853,000 and client assets of $90 million.

In addition, the brokerage firm has announced that all members of its board of directors have been re-elected by a substantial margin, including Chairman and CEO John Mack. The company also says that a shareholder proposal for an executive compensation advisory vote was defeated at its annual shareholder meeting on April 8 in Purchase, N.Y.

"This past year has been an incredibly turbulent time in the financial markets," says Mack. "We've seen market disruptions and illiquidity that have impacted every firm in our industry -- market conditions that are unlike anything I've seen in my 40 years on Wall Street. Morgan Stanley effectively navigated these difficult markets in the first quarter of this year. In fact, we achieved the highest net income and ROE of any firm that has reported earnings to date."

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Janet Levaux is the managing editor of Research; reach her at jlevaux@researchmag.com.

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