Morgan Stanley Loses $2.37 Billion in Fiscal 4Q

Morgan Stanley said Wednesday it lost $2.37 billion during its fiscal fourth quarter as it took a range of losses on assets amid one of the roughest quarters for investment banks.

In this file photo, Morgan Stanley headquarters is shown in New York. Morgan Stanley said Wednesday it lost $2.37 billion during its fiscal fourth quarter as it took a range of losses on assets amid one of the roughest quarters for investment banks.

(Mark Lennihan/AP Photo)

The New York-based firm, which is aggressively building on its new status as a bank holding company, lost $2.34 per share for the quarter ended Nov. 30. It lost $3.61 billion, or $3.61 per share, during the year-ago period when it took a $9.4 billion write-down on mortgage-related assets as the housing crisis began to spiral downward.

Analysts polled by Thomson Reuters, on average, forecast a loss of 34 cents per share. Analysts have been slashing their estimates for the past several weeks amid the ongoing market turmoil. Only a month ago, they were estimating Morgan Stanley would earn 30 cents per share. Over the past year amid the tumult, analyst estimates have often varied wildly from actual results because of uncertainty surrounding banks' holdings and the value of some illiquid assets.

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Shares of Morgan Stanley turned higher Wednesday, after initially falling as low as $14.80 in morning trading. Morgan Stanley shares rose 37 cents, or 2.3 percent, to close at $16.50.

Morgan Stanley took a wide range of charges and losses during the quarter as the value of many assets held by banks plummeted amid the ongoing turmoil. Asset values also plunged sharply in November after the federal government reversed course and said it no longer planned to use its $700 billion bank rescue program to purchase troubled assets from financial firms.

"Market investors love stability and knowing where policy is headed," said Michael Wong, an equity analyst at Morningstar Inc. This policy "flip-flop" caused investors to worry, he said.

Denise Valentine, a senior analyst at Aite Group LLC, said that once the government changed its mind, some companies started selling assets at fire-sale prices in an effort to recoup some money on the investments. Once one sale is completed at a low price, it sets a market price for future sales, she added.