WALL STREET

HIRING OF GORMAN AT MORGAN STANLEY COULD SIGNAL CUTS TO COME

Morgan Stanley, the world’s biggest securities firm, hired James Gorman to turn around the worst-performing brokerage on Wall Street. His past at Merrill Lynch & Company suggests deep cuts may be in store. Mr. Gorman dismissed a third of Merrill’s 20,000 brokers in two years, closed a quarter of its retail branches, focused on the wealthiest clients, and jettisoned less lucrative customers.

The changes almost doubled profit margins at the largest American brokerage, the traditional heart of Merrill. At Morgan Stanley, Mr. Gorman confronts a business with about 10,500 brokers that trails rivals by almost every financial measure and which produces only a quarter of the profits of Merrill’s sales force. That performance contributed to a campaign by shareholders and former executives to oust former CEO Philip Purcell, who left in June.

– Bloomberg News

ENERGY

GOLDMAN SACHS RAISES 2006 OIL FORECAST TO $68 A BARREL

Goldman Sachs, the third-biggest American securities firm by market value, raised its oil forecast for next year to $68 a barrel and said crude will stay at about $60 for several years. Goldman increased its projection for the average New York oil price in 2006 from $55 a barrel. The forecast for $60 oil for the “long term” was raised from $45 because companies aren’t investing enough in new supply, according to the August 17 report from the firm’s commodity research analysts, including Steve Strongin in New York and Jeffrey Currie in London.

– Bloomberg News

IN BRIEF

Carl Icahn said he and Time Warner chief executive Richard Parsons agreed to talk again soon after Wednesday’s first meeting … Casual clothing retailer Tommy Hilfiger is planning an auction to sell the company that may lure buyers from the fashion industry and private-equity firms … Retailers Gap and Limited Brands reduced their annual profit forecasts after the wrong fashion calls led to sluggish second-quarter sales … Barnes & Noble, the world’s biggest book retailer, said second-quarter earnings rose 54% after the new record-breaking Harry Potter book lured shoppers to stores. The company forecast an unexpected third-quarter loss, sending the shares to their biggest decline in five months … The Securities and Exchange Commission filed civil charges against the nephew of a Croatian woman whom the commission sued two weeks ago on charges of “highly suspicious” trading before an announcement that Reebok was being acquired by Adidas-Salomon AG … A federal judge rejected a request by HealthSouth founder Richard Scrushy to throw out a Securities and Exchange Commission lawsuit and instead told the agency to refile by September 7 … Negotiators for Northwest Airlines and its mechanics union met in Washington in hopes of coming to agreement on a new contract before a strike deadline early Saturday … DaimlerChrysler AG’s designated CEO Dieter Zetsche will personally take charge of Mercedes Car Group in September to improve quality and restore profit growth at the luxury carmaker … A Merrill Lynch technology strategist and analyst, Steven Milunovich, 44, is leaving the firm in September to start a hedge fund … Morgan Stanley promoted Walid Chammah to head of investment banking, naming a permanent replacement for a position vacated when Terry Meguid quit in April … Seton Hall University, a Catholic institution named for a saint, removed the name of Dennis Kozlowski from a building on campus. At Kozlowski’s request, the name was removed yesterday … Crude oil rose in New York, paring this week’s 5.4% decline, on concern gasoline supplies may be disrupted before the end of summer.

– Bloomberg News