Morgan Stanley 1999 Annual Report Download - page 24

INTRODUCTION
THE COMPANY
Morgan Stanley Dean Witter & Co. (the “Company”) is a pre-eminent
global financial services firm that maintains leading market posi-
tions in each of its three business segments — Securities, Asset
Management and Credit Services. The Company combines global
strength in investment banking and institutional sales and trading with
strength in providing full-service and online brokerage services, invest-
ment and global asset management services and, primarily through its
Discover®Card brand, quality consumer credit products. The Company
provides its products and services to a large and diversified group of
clients and customers, including corporations, governments, financial
institutions and individuals.
The Company’s results for the 12 months ended November 30,
1999 (“fiscal 1999”), November 30, 1998 (“fiscal 1998”) and
November 30, 1997 (“fiscal 1997”) are discussed below. All share
and per share information presented herein have been retroactively
adjusted to reflect a two-for-one common stock split, effected in
the form of a 100% stock dividend, declared December 20, 1999
and payable January 26, 2000 to shareholders of record as of
January 12, 2000.
RESULTS OF OPERATIONS
CERTAIN FACTORS AFFECTING RESULTS OF OPERATIONS*
The Company’s results of operations may be materially affected by
market fluctuations and by economic factors. In addition, results of
operations in the past have been, and in the future may continue
to be, materially affected by many factors of a global nature,
including economic and market conditions; the availability and cost
of capital; the level and volatility of equity prices and interest rates;
currency values and other market indices; technological changes
and events (such as the increased use of the Internet to conduct
electronic commerce and the emergence of electronic communica-
tion trading networks); the availability and cost of credit; inflation;
investor sentiment; and legislative and regulatory developments.
Such factors also may have an impact on the Company’s ability to
achieve its strategic objectives on a global basis, including (without
limitation) continued increased market share in its securities activ-
ities, growth in assets under management and the expansion of its
Credit Services business.
The Company’s Securities business, particularly its
involvement in primary and secondary markets for all types of finan-
cial products, including derivatives, is subject to substantial posi-
tive and negative fluctuations due to a variety of factors that cannot
be predicted with great certainty, including variations in the fair
value of securities and other financial products and the volatility
and liquidity of global trading markets. Fluctuations also occur due
to the level of market activity around the world, which, among other
things, affects the size, number and timing of investment banking
client assignments and transactions and the realization of returns
from the Company’s private equity and other principal investments.
The level of global market activity also could impact the flow of
investment capital into mutual funds and the way in which such
capital is allocated among money market, equity, fixed income or
other investment alternatives which also could cause fluctuations
to occur in the Company’s Asset Management business. In the
Company’s Credit Services business, changes in economic vari-
ables, such as the number and size of personal bankruptcy filings,
the rate of unemployment and the level of consumer debt, may sub-
stantially affect consumer loan levels and credit quality, which, in
turn, could impact overall Credit Services results.
The Company’s results of operations also may be materially
affected by competitive factors. Included among the principal com-
petitive factors affecting the Securities business are the quality of its
professionals and other personnel, its products and services, relative
pricing and innovation. Competition in the Company’s Asset
Management business is affected by a number of factors, including
investment objectives and performance; advertising and sales pro-
motion efforts; and the level of fees, distribution channels and types
and quality of services offered. In Credit Services, competition
centers on merchant acceptance of credit cards, credit card acquisi-
tion and customer utilization of credit cards, all of which are
impacted by the type of fees, interest rates and other features offered.
In addition to competition from firms traditionally engaged
in the financial services business, there has been increased compe-
tition in recent years from other sources, such as commercial banks,
insurance companies, online service providers, sponsors of mutual
funds and other companies offering financial services both in the
U.S. and globally. The financial services industry also has experi-
management’s discussion and analysis of
financial condition and results of operations
99 AR |page 22
*This Management’s Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements as well as a discussion of some of the
risks and uncertainties involved in the Company’s businesses that could affect the mat-
ters referred to in such statements.