Breaking News - Just one month after Morgan Stanley announced that it was writing-down $3.7bn in subprime and related assets, the firm has shocked the market by posting it first quarterly loss ever - after taking a massive additional write-down of $5.7bn. Morgan Stanley's fourth-quarter loss from continuing operations was $3.59bn.
The firm has sold a $5bn stake to China Investment Corp to beef up its capital. Firm CEO John Mack, who is forgoing a bonus this year, said that 'the writedown Morgan Stanley took this quarter is deeply disappointing - to me, to our colleagues, to our board and to our shareholders. Across the firm, we have moved aggressively to make the necessary changes, and losses by a small trading team in one part of the firm should not overshadow the momentum we see in virtually all of our other businesses'.
If there was ever any thoughts that the subprime contagion was now under control, the Morgan Stanley news will dispell them. Where's the next shoe gonna drop ?