Morgan Stanley Posts Wider Than Expected Q4 Loss

New York, NY (AHN) - Morgan Stanley announced Wednesday a fiscal fourth quarter loss much wider than expected as losses on investments and mortgage-related assets continue to pile up.

The investment bank posted a $2.30 billion or $2.34 a share net loss in the fourth quarter, smaller than the $3.59 billion or $3.61 a share loss in the same period a year ago.

Net revenue swung back to positive, totaling $1.8 billion, compared to the negative $400 million last year.

The results failed to meet analyst estimates of a 34 cent a share loss on $3.78 billion in revenue, according to Thomson Reuters.

Morgan Stanley reported $1.8 billion in investment losses for the quarter. The company also said mortgage-related losses totaled $1.2 billion, much lower than the $9.4 billion last year.

The asset management business saw net outflows of $76.5 billion in the quarter, mainly due to withdrawals from money market and fixed income funds.

Morgan Stanley said it drastically reduced its leverage ratio to 11.4 for each asset dollar from 32.6 at the end of fiscal 2007.

"These exceptional market conditions profoundly impacted our performance this year, especially in the fourth quarter," said CEO John J. Mack said in a press release.

"However, we still achieved three quarters of profitable results and are moving aggressively to reposition the Firm for the future - continuing to resize our business, reduce legacy assets and further strengthen our balance sheet and capital position," he added.

For fiscal year 2008, Morgan Stanley posted earnings of $1.54 a share on net revenue of $24.7 billion.

The company also said it aims to save an additional $2 billion through cost reduction initiatives.