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More on Morgan Stanley (MS -0.6%): The 1.6K job cuts amount to 6% of the investment bank staff...

More on Morgan Stanley (MS -0.6%): The 1.6K job cuts amount to 6% of the investment bank staff and 3% of the overall bank headcount. The eliminations will be top-heavy - a focus on more senior employees - according to a source. Thus far, Morgan isn't getting the stock price pop often accompanied by news of lowered expenses. (previous)
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  • Sensible Investor
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    The firm has been playing the brokerage game since the merger with Dean Witter, were not successful with that idea, and then nearly failed in 2008. Then, the firm decided to double up on its failure with Dean Witter by doing a joint venture with Citi and Smith Barney. The same management that could not manage Merrill Lynch. Dean Witter, and struggled just holding Morgan Stanley together continues to promise happier days ahead. However, the issue is not numbers of employees, or expense, but the failed business model.

     

    I would argue that James Gorman and Greg Fleming need to put Morgan Stanley up for sale. The stock trades at a discount, not on the basis of some skewed valuation but because the assets are valued appropriately at just under $20 per share. The firm never did well with Dean Witter and lacks the seasoning to handle Smith Barney, similar to the issues Legg Mason faced when its management had no experience running a pure asset manager. They nearly failed.

     

    Morgan Stanley needs a sale, a change of direction, and ultimately, a change in management. If they couldn't run Dean Witter well, and then nearly failed in 2008 with much of the same management they have now, then I don't see how doubling up on a failed enterprise is good for shareholders, employees, or clients. If the firm can't raise the dividend, pay its employees bonuses, and cannot afford to buy or maintain Smith Barney adequately, then the only solution is dissolution.
    9 Jan 2013, 08:09 PM Reply Like
  • Teutonic Knight
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    In short, their revenues would not support their current structure and expense outlays. That is why the needed 're-structuring'. This phenomenon is industry-wide though for this type of business. Note that the federal govenment can continue but not the private sector though.
    9 Jan 2013, 09:13 PM Reply Like
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