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Morgan Stanley 1Q surges
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March 23, 2000: 9:05 a.m. ET
Earnings rise 50%, as firm joins other brokerages in results above estimates
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NEW YORK (CNNfn) - Securities firm Morgan Stanley Dean Witter & Co. Thursday reported fiscal first-quarter income 50 percent above what it earned a year earlier on surging revenue from trading and investment banking -- making it the latest brokerage to easily beat Wall Street's estimates.
The nation's No. 2 brokerage, whose operations include the Discover credit card, said income for the three months ended Feb. 29 rang in at $1.5 billion, or $1.34 a diluted share, up from $1 billion, or 88 cents a share, a year earlier. Analysts surveyed by First Call had forecast profit of $1.06 a share.
Morgan Stanley's stellar results place it alongside its Wall Street brethren in the club posting better-than-expected club first-quarter profits. Earlier this week, investment bank Goldman, Sachs Co. reported strong first-quarter earnings, as did online brokerage National Discount Brokers (NDB: Research, Estimates) and investment house Lehman Brothers Inc. (LEH: Research, Estimates).
"These are stellar earnings, just like the rest of them," said Steven Eisman, a banking analyst with CIBC World Markets. "Morgan did extremely well in underwriting, particularly with tech-related companies." Eisman currently rates Morgan Stanley a "buy" and expects it, along with its Wall Street colleagues, to continue to post strong earnings in the second quarter.
 Indeed, Morgan Stanley was the No. 1 underwriter of equities among its peers in the latest quarter, according to Thompson Financial Securities Data. The new York-based firm raised $15.5 billion in 40 issues and held 20.6 percent of the U.S. underwriting market. Goldman Sachs was second with $9.8 billion.
Much of that was from underwriting technology and telecommunications companies, including Freemarkets.com (FMKT: Research, Estimates) and E.Piphany Inc. (EPNY: Research, Estimates). About 74 percent of the firm's revenues come from underwriting, which typically garners fees ranging from 3 percent to 7 percent of an offering's value.
Income at Morgan Stanley's securities unit rose to $1.2 billion from $806 million a year earlier. Those numbers also included profit from merchant banking. Income in the asset management unit rose to $158 million from $107 million, while income from its credit card unit rose to $142 million from $124 million.
Net revenue, which reflects revenue less interest expenses and provisions for losses on outstanding loans, rose 39 percent to a record $7.4 billion from $5.3 billion a year earlier. Net revenue from securities jumped 45 percent to $5.9 billion, while net revenue from asset management and credit services each increased 18 percent to $600 million.
Shares of Morgan Stanley Dean Witter (MWD: Research, Estimates) declined 1-11/16 to 88-7/16 in early trading Wednesday. 
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