As Morgan Stanley tries to find a replacement for recently ousted CEO, Philip Purcell, the firm’s financial performance continues to suffer. It reported its biggest quarterly profit decrease in about four years.
For the second quarter, Morgan Stanley reported a net income of $928 million. This was a 24% decrease from the second quarter of 2004, and down 34% from the first quarter of.
The firm also reported a 22% decrease in diluted earnings per share from last year, $0.86. This is a 33% decrease from the first quarter of this year. According to Bloomberg News,
Shares of Morgan Stanley were unchanged at $50.97 in 10:33 a.m. composite trading on the New York Stock Exchange. The stock has dropped 8 percent since March 28, when Purcell reorganized senior management, prompting the former executives to call for his ouster.
Like rival Goldman Sachs Group Inc. last week, Morgan Stanley attributed much of its profit decline to a slump in trading. Second-quarter revenue from buying and selling bonds, currencies and commodities tumbled 28 percent to $1.3 billion, the firm said.
In a press release, Morgan Stanley said “the results for the quarter include net expenses of approximately $140 million related to various legal matters. The initiation of settlement discussions in the Parmalat matter, subsequent to our earnings pre-announcement on June 13, accounted for the majority of this amount. The Company did not record any changes to legal reserves regarding the Sunbeam/Coleman matter.”
The firm’s $6.0 billion in net revenue was 9% lower than the same period last year, and 12 % less than the first quarter of 2005. Non-interest expenses were down 2% from the first quarter.
Morgan Stanley is reportedly considering former president John J. Mack as a candidate for CEO, but neither he or the firm has confirmed this. He was previously forced to leave the firm because of Purcell.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
