Von Aldo

Morgan Stanley: Changing Comp. Policy; Brother, Can You Spare a Dime?

Bernstein analst Brad Hintz had the following about Morgan Stanley's earnings and added that MS Smith Barney unit performed weaker than expected:

• MS reported EPS of ($0.14), above our estimate of ($0.75). The qtr was messy, with several one-time items, including the already anncd. MBIA settlement. Comp was higher from true-ups on deferred and severance, offset by lower non-comp

• Underlying fundamentals were mixed. FICC remains a work in progress, esp. in credit, while equities continue to win mkt share globally. MSSB was weaker than our est. Revs were weak amid tough environment and comp expense was higher

• MS showed positive signs of improvement this qtr and while FICC and MSSB were disappointment, they are progressing. Slowly but surely, the firm continues its turnaround. We increase 2012 EPS to $1.75 from $1.65 and 2013 EPS to $2.36 from $2.19

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