Morgan Stanley Shares Jump as Firm Beats Expectations

Wall Street giant Morgan Stanley (NYSE: MS) reported record profit and revenue for its fiscal first quarter on Wednesday, with net income rising more than 60 percent from the previous quarter, giving the firm's shares a nearly 7 percent boost for the day.

The second largest Wall Street investment bank by market value said net profit from continuing operations for the quarter was $2.56 million, up from $1.6 million in the first quarter of 2006. The company earned $2.40 diluted earnings per share, compared with $1.51 the previous year. Net reported revenue was $11.0 billion, 29 percent higher than a year earlier.

The results beat expectations. A poll of analysts by Thompson Financial had predicted an EPS of $1.88.

"This strong performance was in large part the result of effective, disciplined risk-taking by our team in Institutional Securities, which helped deliver record results across our sales and trading businesses,' said John J. Mack, Morgan Stanley's Chairman and CEO.

The results helped to dispel fears that a recent downturn in the subprime mortgage sector could have affected the firm's bottom line. Shares in Morgan Stanley closed up 6.86 percent, or $5.22, to $81.33 in trading on the New York Stock Exchange.

Institutional Securities achieved 37 percent revenue growth, reaching $7.6 billion. Pre-tax income rose 71 percent to $3.0 billion, led by strong results in fixed income and equities. Revenues for fixed income and equities were $3.6 billion and $2.2 billion respectively.

Morgan Stanley's wealth management group reported a pre-tax net income of $220 million, compared to $15 million a year ago. The division had $1.5 billion in net revenue.

Asset management pre-tax income was up 37 percent to $236 million on $905 million in net revenue.

The company's Discover card division, which is set to spin off as its own company later this year, earned $372 million in pre-tax income, a drop of 22 percent compared to last year's first quarter. Revenue also dropped 6 percent.