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Morgan, Lehman beat Street
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January 7, 1999: 11:42 a.m. ET
Brokerage firms handily top 4Q estimates despite tough trading period
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NEW YORK (CNNfn) - Two of the nation's leading brokerage firms rocketed past Wall Street's estimates Thursday, fueled by strong growth in the financial services business.
Morgan Stanley Dean Witter (MWD), which raised its quarterly dividend to 24 cents a share from 20 cents, posted fourth-quarter diluted earnings per share of $1.49, compared with $1.30 last year. The operating results exclude a $345 million net gain on the sale of Morgan Stanley's global custody business and an undisclosed amount of credit card loans in the quarter.
Analysts expected the nation's second-largest brokerage firm to earn 96 cents a share, according to First Call consensus estimates.
Morgan Stanley's net income for the quarter rose to a record $1.2 billion, while revenue reached $4 billion, up from $3.7 billion a year ago.
Net operating income for the year reached a record $3 billion, or $4.95 per share, up from $2.6 billion, or $4.27 per diluted share, last year.
The firm also initiated a $1 billion stock buyback program.
"We are extremely proud of these results," Chairman Philip J. Purcell and President John J. Mack said in a joint statement. "Our strategy is to build diverse revenue streams based on strong, established franchises, and it is working. We achieved a full-year record performance despite some very difficult market conditions."
Shares of Morgan Stanley were up 3-11/16 at 84-3/86 on the Big Board late Thursday morning.
At the same time, Lehman Brothers (LEH) posted fourth-quarter diluted earnings per share of 51 cents, down significantly from $1.30 last year but more than double Wall Street's estimates of 21 cents a share.
Revenue for the quarter fell to $665 million from $1 billion in the year-ago quarter, due to "extreme market volatility in September and October."
For the quarter ended Nov. 30, 1998, Lehman Brothers posted net income of $74 million compared with profits of $185 million in the year-ago period.
Net income for the full year reached a record $736 million, up 14 percent from 1997.
"This was an excellent year for Lehman Brothers, despite the difficult market environment we faced throughout much of the second half of the fiscal year," Chairman and Chief Executive Richard S. Fuld, Jr. said. "Even with unprecedented turmoil in the global debt markets that began in August, and a slower underwriting calendar in September and October, Lehman Brothers achieved higher revenues and earnings in 1998 than in any other year in the firm's history."
Shares of Lehman Brothers were trading up 1-9/16 Thursday at 55-3/16 on the New York Stock Exchange. 
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