Morgan Stanley (MS)
Q1 2010 Earnings Call Transcript
April 21, 2010 11:00 a.m. ET

Executives

James P. Gorman - President and Chief Executive Officer
Ruth Porat - Executive Vice President and Chief Financial Officer

Analysts

Glenn Schorr - UBS
Guy Moszkowski - Banc of America/Merrill Lynch
Michael Mayo - CLSA
Michael Carrier - Deutsche Bank Securities
Roger Freeman - Barclays Capital
Howard Chen - Credit Suisse
Matthew Burnell - Wells Fargo Securities, Llc
James Mitchell - Buckingham Research

Presentation

Operator

Welcome to the Morgan Stanley conference call. The following is a live broadcast by Morgan Stanley and is provided as a courtesy. Please note that this call is being broadcast on the Internet through the company''s website at www.morganstanley.com. A replay of the call and webcast will be available through the company''s website and by phone for a period of seven days. This presentation may contain forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements which speak only as of the date on which they are made which reflect management''s current estimates, projections, expectations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of additional risk and uncertainties that may affect the future results of Morgan Stanley, please see Morgan Stanley''s annual report on Form 10-K for the year ended December 31st, 2009 annual report on Form 10-K and Morgan Stanley''s current reports on Form 8-K.

The presentation may also include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in Morgan Stanley''s annual report on Form 10-K and Morgan Stanley''s current reports on Form 8-K which are available on Morgan Stanley''s website, www.morganstanley.com. Any recording, rebroadcast or other use of this presentation in whole or in part without the prior written consent of Morgan Stanley is strictly prohibited. This presentation is copyrighted and proprietary to Morgan Stanley.

At this time, I would like to turn the program over to Ruth Porat for today''s call.

James P. Gorman

Good morning. This is James Gorman. I am here with Ruth Porat and I want to wish her good morning and thank you all for joining us. This first quarter of 2010 marked a period of stability and progress for Morgan Stanley. We saw improvement in revenue, net income, earnings per share and ROE. In addition, across the firm, we saw improved performance in each of our three major business lines, all of which Ruth will address shortly.

We resolved two legacy issues that are reflected within discontinued operations. Specifically, we settled our litigation with Discover for a gain and we chose to dispose of our investment in rebel resulting in a loss. Finally and most importantly, we took a number of steps strategically to strengthen our position for the coming quarters and years ahead.

Let me touch on these briefly. In institutional securities, we completed the first stage of our global hiring plan in outside here. We''ll continue to broaden our footprints for ongoing key hiring and talent retention. We are approaching our priority clients holistically through firm relationship management program.

We''re better organizing our people to deliver the entire firm more consistently to clients. In Global World Management, the integration of joint venture remains on track. We expect to achieve a pre-tax margin of greater than 20% by the end of 2011.

In asset management, Greg Fleming joined us in February as President and has already made some key highs to rebuild the investment courtship. Greg is conducting a thorough review of each of our business lines in developing the segment strategy. The sale of our retail asset management business to Invesco remains on track to close mid 2010.

Our strategic relationship with MUFG continues to gain strength. Together, we completed the largest non-investment grade commitment of the post-Lehman era to CF Industries. In March, we entered into a definitive agreement with MUFG to commence joint venture operations in Japan, effective May 1.

The joint ownership structure creates an industry-leading institutional business and a large local retail brokerage network with significant global reach. Overall, the quarter demonstrates the disciplined execution invest strategy. However, while we''ve made clear progress, we still have much work to do to achieve our long-term goals. Now, I''ll turn it over to Ruth to review our first quarter results. Thank you.

Ruth Porat