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Morgan Stanley, Schwab Report Second Quarter Results

July 19, 1988

Undated (AP) _ Morgan Stanley Group Inc., a major investment firm, on Tuesday reported its net income for the second quarter doubled while Charles Schwab Corp., the nation’s largest discount broker, said its profit fell sharply for the period.

Morgan Stanley said it earned $135.3 million, or $5.28 a share, during the quarter ended June 30, up 117 percent from earnings of $62.4 million, or $2.46 a share in the year-ago quarter.

Including a pre-tax gain of $123.7 million on the sale of the firm’s stake in Cain Chemical Inc., revenue during the period totaled $1.05 billion, up 31 percent from $803.7 million in the second quarter of 1987.

Morgan Stanley Chairman S. Parker Gilbert and Richard B. Fisher, president, said in a joint statement that the results ″reflect important contributions from all of our major business units as well as the Cain Chemical investment gain.″

They noted that merger, acquisition and restructuring activity remained strong during the period.

For the first six months, the company reported net income of $233.9 million, or $9.11 a share, up 85 percent from $126.7 million, or $5 a share in the year ago period.

Revenue jumped 28 pecent to $2.02 billion, from $1.58 billion in the first half of 1987.

At San Francisco-based Schwab, net earnings plunged 84 percent due to ″reduced retail investor participation in the stock market,″ the broker said in a statement.

Net earnings totaled $2.1 million, or 8 cents a share, down from $13.4 million, or 48 cents a share in the year-ago period.

Revenue fell 15 percent during the quarter to $95.7 million from $113.2 million a year ago.

Chairman and Chief Executive Officer Charles R. Schwab noted in a statement that the brokerage had anticipated lower activity in the wake of the October stock market crash and ″responded by implementing cost reduction programs which have started to improve the company’s operating efficiency.″

He noted that the company is continuing to ″take steps to reduce costs during this period of lower trading volumes.″

For the first six months of the year, Schwab reported earnings of $4.1 million, or 15 cents a share, off 85 percent from $26.9 million, or 96 cents a share in the year-ago period.

Revenue during the first half totaled $191.9 million, down 14 percent from $224.4 million in the first six months of 1987.

Results for 1987 comparisons take into consideration Schwab’s management- led buyout, which occurred in March 1987 and the brokerage’s initial public offering, which took place later that year in September.