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A wave of beach house closings are no doubt getting called off as Morgan Stanley (MS) will...

A wave of beach house closings are no doubt getting called off as Morgan Stanley (MSwill issue IOUs instead of bonus cash to high-salaried employees this winter. The IOUs will be paid off over the course of the next two years, with any workers leaving their jobs at risk of never seeing the money. The move is inline with CEO Gorman's (and Dan Loeb's) desire not to encourage risky behavior to juice short-term gains.
Comments (2)
  • brillio331
    , contributor
    Comment (1) | Send Message
     
    German is a complete bean counter who has no idea hoiw to build a growing business. At some point, he won't be able to cut anymore, will have effectively chased every qualified individual out of the firm, will get paid ridiculous millions of dollars, and leave the firm as a shell of itself in last place among its peers. He should be back in Australia destroying companies there instead of being let loose on once proud American institutions.
    16 Jan 2013, 09:43 AM Reply Like
  • Sensible Investor
    , contributor
    Comments (73) | Send Message
     
    You're spot on. James Gorman has not added value to the franchise, as evidenced by the wealth destruction that has occurred because of his policies. The idea to add another brokerage when the Dean Witter merger was a disaster has to rank up there with the Delorean and Betamax products. Under his so-called leadership the firm has continued to lose workers, cannot pay a dividend, and has offered no one qualified to run the new wealth management unit. Yes, Greg Fleming is smart, but an investment banker is not the ideal candidate. Also, for those with longer memories, Morgan Stanley was 107 per share in 2000. Yet, it continued to drop in price, even as MS competitors, especially the regional firms, have moved higher.

     

    There is no reason for an American firm to be offshored, as MS was to India and Japan except out of cost cutting madness and the lure of cheap labor or desperation. I also don't think anyone compares Gorman to Jamie Dimon, who is cerebral to Gorman's impulsive bean counting ways. Bean counters are not intellectuals. They do, rather than create. Dimon creates wealth, while MS lags behind its peers in many metrics, including, and especially profitability.

     

    MS cannot and will not continue to defer bonuses because management cannot run a business. There will be repercussions in lost talent, and lost market share. Ultimately, the firm will be sold or fail. This year, as it has for many of the past post Dean Witter years, the firm blamed the market for its woes instead of looking at the real issue, which is a lack of leadership ability. But...as management has said since Dean Witter-better days are ahead. Just don't expect to benefit if there are any.

     

    If brokers care about their clients, Wells, JP Morgan's nascent brokerage, and RBC among others offer better management and stability. Aside from that, MS lacks a bank, which they stubbornly refuse to offer clients, despite solid evidence that banks offer stability. That's why JP Morgan has made a solid profit while Gorman's firm languishes. No more escuses. The board owes clients, shareholders, and employees real leadership. If Gorman can't deliver, then sell the firm, and change the leadership.
    16 Jan 2013, 07:29 PM Reply Like
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