thrashed thursday night, page-44

ahh, another one bites the dust.. again..

Nov. 8 (Bloomberg) -- Morgan Stanley, the second-biggest U.S. securities firm, joined Merrill Lynch & Co. and Citigroup Inc. in booking losses on subprime mortgage-related assets and said the outlook for credit markets is bleaker than in September.

The company said it lost $3.7 billion in the two months through Oct. 31 after prices for securities linked to home loans to risky borrowers sank further than the firm's traders expected. The decline cuts fourth-quarter earnings by $2.5 billion, although that figure may change by the end of November, the New York-based company said.

Merrill Lynch, the third-largest securities firm, and Citigroup, the biggest U.S. bank, also reported in the past two weeks that the value of their mortgage holdings deteriorated since the end of August, after late payments on U.S. home-loans rose to a five-year high and foreclosures set a record. Colm Kelleher, Morgan Stanley's chief financial officer, said he now expects credit markets to take three to four quarters to recover instead of the one or two he predicted in September.

``The healing process will take longer,'' Kelleher, 50, said in an interview yesterday. ``The dislocation in the market has been quite severe, liquidity has dried up.''

Concerns about potential writedowns at Morgan Stanley have pushed the stock lower this week, bringing the year-to-date decline to 24 percent. The shares fell 6.9 percent to $51.19 in New York Stock Exchange composite trading yesterday. Citigroup and Merrill are both down more than 40 percent this year.

Morgan Stanley's asset writedowns could wipe out fourth- quarter profit. The company was expected to earn $1.93 billion in the period, according to the average estimate of 10 analysts surveyed by Bloomberg.