Morgan Stanley Posts $2.3B Loss

Yesterday, it was Goldman Sachs. Today it’s Morgan Stanley, posting a $2.36 billion loss in its fiscal fourth quarter, which ended Nov. 30. Much of the loss stemmed from older investments that are still losing money, and reduced revenues unable to balance out these continuing losses, as the company managed to do in previous quarters. The two former investment banks may have the distinction of not being voted off the Wall Street island, but that doesn’t mean they’re making the big bucks they used to. Neither is the hotel business, which proved so profitable in the years following the industry’s slump in the early 2000s. Atlanta-based PKF Hospitality Research, which specializes in tracking the hotel business, is predicting that revenue per available room, an important metric in the business, will decline 7.9 percent in 2009; total revenues will be off 7.3 percent next year as well. Compounding the problems of the industry is the fact that about 191,000 new rooms are still in the construction pipeline, planned and financed before the credit freeze reduced such deals to a trickle, according to the STR Construction Pipeline Report. As a side effect of the problems in the hospitality business, the report also estimates that some 93,200 rooms were abandoned in various stages of development, from pre-planning to in construction, in November 2007, up from about 8,700 in October. To add to the hospitality industry’s woes, AAA is estimating that the number of U.S. travelers this holiday season will be down by a total 2 percent compared with 2007. Most of that decline will be in air travel, with the number of passengers going down 9 percent compared with last year. The number of travelers by auto is projected to decline only about 1 percent. So who is profiting in the current economy? General Mills Inc. and ConAgra Foods Inc. are, posting quarterly profits that exceeded expectations. Commodity prices that they are paying have eased, while consumers are eating out less. “All packaged-foods companies are seeing some benefit” from the fact that people are visiting restaurants less and eating at home more, Matt Arnold, an analyst with Edward Jones & Co., told Bloomberg today.