Morgan Stanley: $2.5 Billion Write-Down


Morgan Stanley on Wednesday said it expects fourth-quarter earnings to be reduced by about $2.5 billion from a write-down of its U.S. subprime exposure.

The Wall Street investment bank said revenue has been reduced by $3.7 billion for the two months ended Oct. 31 because of the write-down. It said the actual impact on quarterly results will be determined by market events.


It’s less than it was rumored to be, says Tim Seymour.

Guy Adami says it’s not a good thing, but the write-down should knock MS stock to levels at which it should be trading. Adami recommends watching for a buying opportunity. If you think investment banks won’t be in business 6-9 months from now, you’re crazy, he says.

Pete Najarian recommends owning volatility because he expects bigger swings in the stock market. He recommends straddling the S&P 500 (SPY)… buying a call option and a put option.


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Trader disclosure: On Nov. 7, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (CSCO); Najarian Owns (AMZN) Options, (C) Options, (DISH) Options, (GOOG) Options, (LDK) Options, (YHOO) Options; Finerman's Firm Owns (AEO), (WMT), (TWX), (TSO), (YHOO); Finerman's Firm Is Short (MDY),Short (IWM),Short (IJR), Short (MBI),Short (LEH),Short (MER); Finerman's Firm And Finerman Own (GS); Finerman's Firm Owns Russell 2000 Puts; Seygem Asset Management Owns (EEM), (F), (GFI), (GLD), (HMY), (LDK), (YHOO); Finerman's Firm Is Short (SPY)