Morgan Stanley’s steep losses beat Street

Morgan Stanley suffered a 61% drop in second-quarter net income due to declines in its asset management, trading and investment banking businesses, but still beat analysts' expectations. The New York-based investment bank today reported earning $1.01 billion, or 95 cents per diluted share, in the quarter ended May 31. That compares with a profit of $2.57 billion, or $2.45 per diluted share, in the same period in 2007. Analysts surveyed by Thomson Financial had expected a profit of 92 cents per share. The asset management business posted a loss of $227 million in the quarter, compared with net income of $303 million in the year-ago period. Equity sales and trading revenue fell 11% from a year ago, to $2.1 billion. On a positive note, revenue in the global wealth management business increased 48%, to $2.4 billion, helped by the $698 million sale of its Spanish wealth management unit. Revenue in the investment banking business plunged 49% from the year-ago period to $875 million. “Given the turbulent environment this quarter, we stayed close to shore and continued strengthening the firm's capital and liquidity positions,” Morgan Stanley chief executive John Mack said in a statement.