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Morgan Stanley 3Q jumps
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September 22, 1999: 10:31 a.m. ET
No. 2 broker cites rebound from '98 market, record M&A advisory revenue
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NEW YORK (CNNfn) - Securities firm Morgan Stanley Dean Witter & Co. said Wednesday third-quarter earnings rose 55 percent, topping analysts' expectations amid record revenue from merger advisory activities and a bullish stock market.
The nation's No. 2 brokerage, whose operations include the Discover credit card, earned net income of $970 million, or $1.65 per diluted share, up from $626 million, or $1.01 per share, a year ago, when turmoil struck the stock and bond markets.
The consensus of analysts' estimates was for earnings of $1.63 a share, according to research firm First Call Corp., which tracks such estimates.
Revenue rose 39 percent to $5.3 billion.
The strong upswing follows a tremor-stricken market last year, particularly in the bond sector. Morgan Stanley Dean Witter has not been the only securities firm to ride the rebound; Goldman Sachs (GS) said Tuesday third-quarter net nearly doubled and A.G. Edwards (AGE) Monday beat analysts' estimates by five cents per share.
"It was a solid quarter," said Donaldson, Lufkin & Jenrette analyst Joan Solotar, who has a "market perform" rating on Morgan Stanley. "But compared to Goldman, they didn't knock the cover off the ball."
Still, the earnings topped Wall Street estimates by a far smaller margin than the firm achieved in the first two quarters of the year. The results also marked a 16 percent decline from the record $1.15 billion profit Morgan Stanley tallied in its second quarter, mostly because of a 39 percent decline in revenues from trading bonds and stocks.
Income from asset management rose to $135 million, after a break-even tally in the third quarter last year amid the trouble in the debt market. Credit services net rose 10 percent to $202 million, while income in its securities unit soared 43 percent to $633 million.
"Investment banking just looked extraordinary," Solotar said. Morgan Stanley credited its strong European business, record revenue in merger and acquisition advising services, the rally in commodity prices and solid equity underwriting for those gains.
"We continued to benefit from the diversity of our revenue streams and strong global presence," Chairman Philip Purcell and President John Mack said in a statement. "Our securities business has done particularly well in the active European markets."
In early trading on the New York Stock Exchange Wednesday, shares of Morgan Stanley Dean Witter (MWD) fell 1-3/4 to 87-1/16, after losing more than 2-1/2 Tuesday. 
-- from staff and wire reports
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