Morgan Stanley (MS) is a New York-based icon of investment banking and wealth management that ranks among the most formidable forces in financial services. With predecessor companies dating back to 1924, modern-day Morgan Stanley has three business segments: It sells investment banking services to corporations, such as advice on business mergers and acquisitions. It serves as a wealth manager for individual investors in stocks, options, futures, precious metals, and mutual funds. And it advises individual and institutional investors in hedge funds, real estate, private equity, and other alternatives to publicly traded investments.
"Our premier investment banking franchise remains a clear industry leader, maintaining our No. 1 ranking in global M&A (mergers and acquisitions) in a robust deal market," James P. Gorman, president and chief executive officer of Morgan Stanley, said in a statement with first-quarter results. "We also made gains in (other) key areas of focus."
The company's net revenues in the first quarter fell to $7.63 billion, down 16 percent from the same period in 2010, while net income dropped to $736 million, down 48 percent. The results reflected an after-tax loss of $425 million arising from Morgan's 40 percent stake in a Japanese securities venture.
As mid-year approached, about half of the analysts following Morgan had buy ratings on its stock and about half had neutral ratings. Deutsche Bank maintained a buy rating on Morgan Stanley stock in a June report, citing the company's progress in disposing unwanted assets and improving its capability to manage risk.
Battered by panic
Morgan's stock price began the year well below its 2007 peak, which preceded a sharp drop in late 2008 amid a worldwide financial panic driven by a collapse in the market for mortgage-backed securities. One way Morgan Stanley got through the financial panic was by gaining regulatory designation as a bank holding company in September 2008. But doubt about the future regulation of the financial industry has weighed Morgan's stock price.
In July 2010, as a bank holding company with assets of $50 billion or more, Morgan Stanley became subject to a new national regime under the Dodd-Frank law, designed to manage systemic risks that large financial institutions pose.
In February 2011, Morgan Stanley said in its annual 10-K report filed with the Securities and Exchange Commission that "it is not yet clear how the regulators will apply the heightened prudential standards on systematically important firms.”
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