Morgan feels subprime pain in Q4

Mortgage-related losses took a $9.4 billion bite out of Morgan Stanley’s fourth-quarter report, the bank said yesterday. These write-downs, which were announced in November, bring the bank’s total charges for subprime mortgages to $10.8 billion. Earnings for the fourth quarter were also dented, as the company brought in the first quarterly loss in 72 year: a net loss of $3.58 billion or $3.61 per diluted share, compared to net income of $2.20 billion or $2.08 per diluted share in the fourth quarter of 2006. Full year results were also dismal, as net income fell to $3.20 billion, or $2.98 per diluted share, versus $7.4 billion or $7.07 per diluted share last year. Net revenues were in the red, hitting negative $450 million, compared to $7.8 billion last year. Still, performance in other business segments was strong: Asset management had its best year ever, with assets under management reaching $597 billion, a $101 billion gain from the previous year. Meanwhile, Investment banking revenues gained 31% from last year to reach a record breaking $5.5 billion. Advisory revenues were also up to a record $2.5 billion, a 45% gain from 2006. Accepting responsibility for the New York firm’s mortgage losses, chairman and chief executive John J. Mack said that he would not take a bonus for the year. “The write-down Morgan Stanley took this quarter is deeply disappointing,” he said in a statement. “Ultimately, accountability for our results rests with me, and I believe in pay for performance, so I’ve told our compensation committee that I will not accept a bonus for 2007.”