Morgan Stanley Reports First-Quarter Loss, but Beats Estimates Morgan Stanley reported adjusted earnings on Thursday that beat analyst estimates, driven by stronger-than-expected trading revenue. Including charges, however, the firm had a first-quarter loss of $94 million, or 6 cents a share. That compares with a profit of $968 million in the year-ago period. The results were affected by one-time accounting charges related to the firm's credit spreads. Excluding those one-time items, the firm had a profit of 71 cents a share. That handily beat the 44 cents a share estimates of analysts polled by Thomson Reuters. Morgan Stanley's first-quarter revenue fell 8 percent to $6.9 billion, down from $7.57 billion in the year-ago period. Excluding the accounting charges, revenue was $8.9 billion, up from the $7.8 billion in the same quarter a year ago. "This quarter is further evidence that Morgan Stanley has rebounded from the financial crisis of 2008 and is in a significantly stronger position," James P. Gorman, chairman and chief executive of Morgan Stanley, said in a statement. Of particular note was the strength in sales and trading, which showed broad-based gains across products and regions. On an operating basis, it was one of Morgan Stanley's best quarterly showings since the financial crisis. Its return on equity excluding the accounting charge, was roughly 9 percent, higher than in many previous quarters. The operating results are good news for Mr. Gorman, who has been working since the financial crisis to retool Morgan Stanley by shifting its focus away from potentially riskier businesses like trading and into steadier, less capital-intensive areas like wealth management. While he has notched some successes, the company still faces challenges. Notably, Moody's Investors Service has threatened to downgrade the credit rating of Morgan Stanley and 16 other major financial institutions. Morgan Stanley is seen as more vulnerable than most other banks because Moody's is threatening to downgrade Morgan further than the others. Unlike some of its rivals, Morgan Stanley has not moved critical business lines into subsidiaries that have higher credit ratings. It is expected Morgan Stanley will address the downgrade threat on Thursday on the call with analysts. On Wednesday, Goldman Sachs's chief financial officer, David Viniar, took aim at Moody's during his firm's earnings call. "We very strongly disagree with some of the things that Moody's has mentioned in some of their reports," Mr. Viniar said. We think that if you look at every single credit metric there is for Goldman Sachs, and frankly for many of our competitors, none of the actions they have talked about are warranted. Earlier this week, Goldman Sachs posted profit of $3.92 a share, which was down from the year-earlier period but well ahead of analyst estimates. Citigroup, Wells Fargo and JPMorgan Chase have also reported first-quarter earnings that beat expectations. Morgan Stanley's institutional securities group reported revenue of $3.02 billion, down slightly from the $3.57 billion it reported in the year-ago period. Excluding the accounting loss the division notched revenue of $5 billion, up from $3.76 billion in the year ago period. Asset management posted net revenue of $533 million for the period, down 14 percent from the year ago period. Revenue at its fixed income and commodities sales and trading unit was $2.6 billion, up 34 percent from a year ago. The firm said that reflected strong first-quarter trading in interest rates, commodities and corporate credit. In the global wealth management division, which includes Morgan Stanley Smith Barney, revenue increased slightly to $3.41 billion from $3.4 billion in the same period a year earlier. In the first quarter, the firm set aside $4.4 billion for compensation, or 64 percent of its net revenue. The company said the $4.4 billion includes $138 million related to staff reductions.