[R]12:30PM New York – Morgan Stanley revenue declined 17% and earnings fell 32% from a year ago.[/R]

Morgan Stanley today reported income from continuing operations for the first quarter ended February 29, 2008 of $1,551 million, or $1.45 per diluted share, compared with $2,314 million, or $2.17 per diluted share, in the first quarter of last year.

Net revenues were $8.3 billion, 17% below last year’s first quarter. Non-interest expenses of $6.1 billion, including severance expense of approximately $161 million related to staff reductions, decreased 7 percent from a year ago.

Morgan Stanley wrote down $1.1 billion of loans and commitments largely related to acquisition financing to non-investment grade companies and the write-down of securities in the Firm’s subsidiary banks.

The annualized return on average common equity from continuing operations was 19.7% in the current quarter, compared with 30.9% in the prior year.

Net income for the quarter was $1,551 million, or $1.45 per diluted share, compared to $2,672 million, or $2.51 per diluted share, in the first quarter of 2007. Net income for the first quarter of 2007 includes the results of Discover Financial Services and Quilter Holdings Ltd which are reported in discontinued operations.

Institutional Securities revenues were $6.2 billion, equity sales and trading revenues were a record $3.3 billion, up 51% from a year ago, reflecting record results in both derivatives and prime brokerage and fixed income sales and trading revenues were $2.9 billion.

Investment banking delivered solid revenues of $980 million, including advisory revenues of $444 million, up 19% and global wealth management achieved net revenues of $1.6 billion, up 6% from a year ago and a pre-tax margin of 16% compared to 15% from a year ago.

Global Wealth Management Group''s pre-tax income for the first quarter was $254 million, a 12% increase from $226 million in the first quarter of last year.

Total client assets were $722 billion, a 5 percent increase from last year’s first quarter. Client assets in fee-based accounts were $185 billion, an 8 percent decrease from a year ago and represent 26 percent of total assets.

The 8,456 global representatives at quarter-end achieved average annualized revenue per global representative of $761,000 and total client assets per global representative of $85 million.

Institutional Securities posted pre-tax income of $2,117 million, compared with $2,845 million in the first quarter of 2007. Net revenues were $6.2 billion compared with net revenues of $7.2 billion a year ago.

The quarter’s pre-tax margin was 34%, compared with 40% in last year’s first quarter.

Assets under management or supervision at February 29, 2008 were $577 billion, up $56 billion, or 11%, from a year ago, driven by increases in the alternative and institutional money market asset classes. Asset Management recorded net customer inflows of $6.6 billion for the quarter, primarily from institutional money markets, the sixth consecutive quarter of net customer inflows.

As of February 29, 2008, the Company has not repurchased any shares of its common stock this fiscal year.

The Company announced that its Board of Directors declared a $0.27 quarterly dividend per common share. The dividend is payable on April 30, 2008, to common shareholders of record on April 11, 2008. The Company also announced that its Board of Directors declared a quarterly dividend of $313.29 per share of Series A Floating Rate Non-Cumulative Preferred Stock (represented by depositary shares, each representing 1/1,000th interest in a share of preferred stock and each having a dividend of $0.31329) to be paid on April 15, 2008 to preferred shareholders of record on March 31, 2008.

Total capital as of February 29, 2008 was $198.2 billion, including $43.9 billion of common shareholders'' equity, preferred equity and junior subordinated debt issued to capital trusts. Book value per common share was $29.11, based on 1.1 billion shares outstanding.