Morgan Stanley May Suffer After Discover Card Spinoff

By Michael J. Martinez, AP Business Writer

Morgan Stanley’s bottom line will likely suffer after the spinoff of Discover Financial Services and the division’s strong cash flow, but the company is focused on expanding its other businesses to compensate, Chairman and Chief Executive Phil Purcell said Tuesday before a standing-room-only crowd of investors.

Purcell, speaking at UBS’ Global Financial Services Conference, downplayed the recent high-level executive departures that have fed criticism of his leadership. Five of the 14 members of Morgan Stanley’s executive committee left the company over the past six weeks.

“When you choose some people in a new management structure, you don’t choose others, and in the process we lost some valued members of our management team,” Purcell said. “We are very happy with the choices that we’ve made.”

The departures — which included the highly regarded investment banker Joseph Perella — added to calls for Purcell’s dismissal from a group of eight former executives and shareholders, who had already been blaming Purcell for what they felt was mediocre performance and a lagging stock price.

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