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 NEW YORK (AP) - After a day of speculation that Morgan Stanley was planning to sell its Discover Card division, the company said late Monday its board instead had voted to spin off its credit card unit to existing shareholders.
The move by embattled Morgan Stanley Chairman and Chief Executive Philip Purcell and his fellow board members still could be trumped if a bidding war for Discover emerges, but analysts saw it as a smart maneuver to deflate arguments raised by dissident investors. Shares of the Wall Street brokerage house, which gained more than 2.5 percent on media reports of the potential Discover sale during regular trading, rose another 1.5 percent to $59.15 in after-hours trading.
Earlier Monday, the dissident shareholder group, which includes former Morgan Stanley executives, stepped up a letter-writing campaign and called for the removal of Purcell in a full-page newspaper ad. Purcell and the board both sent memos to employees, reassuring them on the company's direction.
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