How to rate the worst news? First ever loss? Biggest write-off? There is something exceedingly unsettling when two venerable financial-sector firms suffer the way Bear Stearns and Morgan Stanley suffered in their fourth quarters. Bear reported its first loss in its 84-year life, posting a negative $854 million in the wake of total net subprime writedowns of $1.9 billion, for the quarter ended November 30.

That compares to net income of $563 million in fiscal fourth quarter of 2006. Net income for the fiscal year was $233 million, a fraction of the $2.1 billion of fiscal 2006. Remember how Morgan Stanley was expecting to write down $3.7 billion? That grew in a month to $9.4 billion, and resulted in a $3.7 billion loss for its fourth quarter ended November 30. Morgan even reported negative revenue of $450 million for the period.

Net income for fiscal 2007 from continuing operations fell to $2.56 billion from $6.34 billion in fiscal 2006. In an effort to shore up its capital position, Bear also entered into an agreement with China Investment Corp., with CIC acquiring up to 9.9 percent in Morgan for $5 billion.

Visa Inc. reported a $861 million loss in its fiscal year ended Sept. 30, largely related to its $1.9 billion settlement with American Express, not the cheeriest news in advance of its planned IPO. Finally, Discover Financial Services reported a net loss of $84 million in its fiscal fourth quarter, driven by a $391 million writedown on its Goldfish credit-card unit in the UK. Discover also increased its loan-loss provisions to $339.9 million from $239.7 million in the year-earlier period.

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