The Firm is on a systemic downward death spiral caused inconsistent vision and poor execution.
Prior to the merger of Morgan Stanley and Dean Witter, Morgan Stanley was one of the most elite firms in Financial Services. Since the merger the Firm was suffered a perpetual identity crisis. It oscillates back and forth between wanting to be a retail brokerage Firm or a trading shop. Unfortunately the oscillations happen at a frequency that never allows the Firm successfully realize the vision of leaders. As such the Firm is not the best at either. Currently the Firm is focused on Retail as evidenced by it's acquisition of 51% of Smith Barney. The merger is at least a year behind schedule and excessively over budget. From an earnings perspective the Firm has not been able to put together two successive quarters of positive results. Each earnings report is laden with reasons to justify its inconsistent performance. The Firm does not seem to know how the grow revenue so it is trying to improve profitability by contracting expenses. This is being achieved by continuously reducing head count, benefits, salaries and capital investments. Are these changes working? No, the stock price is down 18% year to date, moral is down, and our ability to attract top talent is diminishing.
Prediction: the Firm is acquired within 12-18 months.
