It's an understatement to say that Morgan Stanley
But, yesterday, Purcell gave Wall Street a big surprise: He announced his retirement. According to Purcell, there were too many distractions because of the "continuing personal attacks."
Morgan board member Charles Knight will lead the search for a new CEO. In the meantime, the company will continue to pursue its spin-off of the Discover credit card unit.
On the conference call yesterday, Morgan indicated that its earnings will fall anywhere from 15% to 20% lower than last year's, to between $0.88 cents and $0.94 cents a share. The company reports on June 22. Morgan shareholders are doubtlessly wondering: Where and how was the damage done?
Investment banking is a relationship business. Banks must cultivate an environment in which rainmakers can excel, whether they're maintaining relationships with existing clients or establishing new ones. The turmoil surrounding Purcell's departure, and the associated discontent among current and former bigwigs, does not bode well for either task.
Keep in mind that turnover is quite common at investment banks. If a better deal comes along, a rainmaker will often go for the top dollar. (Hey, isn't that what dealmakers do?) But the recent defections have become headline news for Morgan. For example, late last week, nine employees from Morgan's derivatives unit bolted to Wachovia.
What's worse, it appears that Morgan is experiencing a slowdown in M&A and IPO transactions. A similar slump seems to be dogging other investment banks, such as Goldman Sachs
It's not easy to find someone with experience in managing a global financial institution, but Morgan will need to act quickly to hire its next CEO.
Bank on these related Foolish Takes:
Fool contributor Tom Taulli does not own shares mentioned in this article.
More from The Motley Fool
Why BlackBerry Is a Buy Heading Into Q3 Earnings
BlackBerry should report another round of improvements in software revenue and margin.
Twitter Stock Pops to Fresh 52-Week High on Analyst Upgrade and Expanded Harassment Policies
Can The Trade Desk Keep Going After Last Week's 10% Pop?
The programmatic advertising leader moves higher after an opportunistic SunTrust analyst upgrade.