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Morgan short, Goldman tops
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December 19, 2000: 12:01 p.m. ET
Morgan Stanley misses 4Q forecast, Goldman beats expectations
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NEW YORK (CNNfn) - Morgan Stanley Dean Witter and A.G. Edwards sharply missed quarterly earnings expectations, but Goldman Sachs trounced revised estimates Tuesday.
Morgan Stanley's fourth-quarter earnings for the quarter ended Nov. 30 fell to $1.2 billion, or $1.06 a share, from $1.6 billion, or $1.42 a share, a year earlier. The results were well below Wall Street forecasts of $1.29 a share.
 Morgan Stanley (MWD: Research, Estimates) stock rose $4.38, about 6 percent, to $73.63 by midday, but gave up those gains by the close of trade. The stock finished the day down 25 cents to close at $69.
"The stock is really looking ahead to better times down the road," said James Schmidt, fund manager at John Hancock. "We're expecting of course a Fed rate cut and a resurgence in investment banking activity into next year."
"I think some of the consensus numbers are a little stale some of the estimates that go into that don't reflect the recent thinking many analysts have about Morgan Stanley," Schmidt added.
Fourth-quarter revenue was little changed at $5.7 billion. Securities income for the quarter fell 36 percent to $888 million.
For the year, Morgan Stanley earned $4.73 per share, up 15 percent from the previous year. Net revenues rose 22 percent to $20 billion.
"Our three major businesses -- securities, asset management and Discover Card -- all had record net income for the year," said Philip J. Purcell, Morgan Stanley Chairman, and Morgan Stanley President John J. Mack, in a joint statement. "At the same time, we are disappointed with the decline in our operating margins. Weak results in fixed income and private equity and unusual compensation pressure in institutional securities contributed to the decline."
Goldman beats revised estimates
Investment banking leader Goldman Sachs reported fourth-quarter earnings of $1.50 a share before an acquisition charge. That was above Wall Street forecasts of $1.38 a share, but below the $1.54 a share earned a year earlier.
Including the $180 million charge for its acquisition of Spear, Leeds & Kellogg, Goldman earned $1.16 a share.
Goldman's earned $781 million for the three months ended Nov. 24, up 3 percent from the same quarter a year ago. Revenue for the quarter was $3.42 billion, slightly down from the $3.47 billion it recorded last year.
For the year, Goldman earned $3.25 billion, or $6.35 per share, compared with $2.55 billion, or $5.27 per share, for fiscal year 1999. Analysts were expecting yearly earnings of $6.24 per share, according to First Call
"Although the markets continue to be slower for a number of our businesses, we are cautiously optimistic about the prospects for our business in 2001, and confident of the significant global growth opportunities of the coming years," said Henry M. Paulson, Jr., Goldman chairman and CEO, in a statement.
Goldman (GS: Research, Estimates) shares closed up $3.44 to $89.38.
A.G. Edwards misses
Brokerage A.G. Edwards reported third-quarter earnings 26 cents below consensus expectations.
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Our third fiscal quarter was anemic at best
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Benjamin F. Edwards, III
Chairman and CEO
A.G. Edwards |
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For the three months ended Nov. 30, the company earned $57.2 million, or 69 cents per share, compared with $115.3 million, or $1.23 per share, for the third quarter of 1999. First Call reported expectations of 95 cents per share.
Third-quarter revenues were $662 million, down 7.4 percent from the same quarter a year ago.
"Our third fiscal quarter was anemic at best," said Benjamin F. Edwards III, chairman and CEO, in a statement. "The frantic business pace that started this time last year and continue for five wonderful months has been succeeded by down markets and declining investor participation.
Shares of A.G. Edwards (AGE: Research, Estimates) closed down $2.25 to $43.56. 
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