Morgan Stanley 2005 Annual Report Download - page 12

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What is our plan to achieve the level of performance our firm is
capable of delivering and our investors have every right to expect?
Strategically, we will continue to be a diversified, global firm
focused on improving growth, profit margins and return on equity.
We will take full advantage of our global scale and our world-class
franchise by further integrating our businesses and putting more
of our own capital to work in principal investments. We are com-
mitted to addressing underinvestment in both our Retail and
Asset Management businesses and will build our capabilities in
areas where the firm is underrepresented. We will aggressively
pursue new opportunities for organic growth and, when appropri-
ate, acquisitions that will help grow the scope and scale of our key
businesses. We will tear down any barriers that impede our ability
to work as one team across Morgan Stanley and create a cohesive
“one firm” culture where every employee acts and feels like an
owner of the firm. We will continue to nurture and support
the first-rate talent that makes this firm what it is, and we will
relentlessly execute on the operating plan we’ve developed to
drive growth and increase earnings.
We have already undertaken significant steps to improve our
overall performance. We’ve further strengthened our management
team, drawing on talent from both inside and outside the firm.
We hired, among others, James Gorman to lead Retail Brokerage
and Gary Lynch, the former head of enforcement for the Securities
and Exchange Commission, to be our Chief Legal Officer. We
have assembled a new leadership team and organizational structure
in Institutional Securities, where Neal Shear and Jerker Johansson
have continued to integrate the firm’s equity and fixed income
businesses to drive revenue growth and improve the delivery of
multi-asset-class opportunities to our clients. Owen Thomas was
appointed our new head of Asset Management in December, and
he has already started to implement a strategy to deliver growth
and profitability in that business. We also reached an agreement
in January 2006 to sell our non-core aircraft leasing business, and
we plan to invest the sale proceeds in our core businesses.
We are moving aggressively to improve performance:
•In Institutional Securities, we’re focusing on maintaining a
leadership position in areas with the highest expected growth
while investing to increase our scale in areas where we are
underrepresented, such as principal investments, equity
derivatives and European mortgages. We will expand our
capabilities across fixed income, equities and investment
banking by creating structured products and more innovative
solutions for clients. For instance, we plan to enhance our
strong commodities business by using it as a platform for
investing in physical assets such as power plants. We also are
committed to building our leveraged finance business to
better focus on profitable and underexploited opportunities
in the middle market.
•Emerging markets, with their high projected GDP growth
rates, offer significant opportunities for expansion, particularly
LETTER TO SHAREHOLDERS
In 2005, we achieved
record fixed income
sales and trading
revenues, record prime
brokerage revenues
and the highest
advisory revenues
in five years.