Goldman profit, revenue plunges
JOE BEL BRUNO
Tuesday, September 16, 2008
Goldman Sachs Group Inc., the larger of America's two remaining major independent investment banks, Tuesday reported its worst drop in profits since going public in 1999.
The investment bank reported that its third-quarter profit plunged 71 per cent to $810-million (U.S.) after preferred dividend payments versus a year ago. Goldman's results reflect continuing damage from the ongoing credit crisis that has already vanquished three of its rivals.
Goldman Sachs and Morgan Stanley remain the only major independent investment banks on Wall Street after a major shakeup of the investment banking industry. Lehman Brothers Holdings Inc. filed for bankruptcy Monday after succumbing to distressed real estate holdings, while Bear Stearns Cos. and Merrill Lynch & Co. were swallowed by commercial banks.
“This was a challenging quarter as we saw a marked decrease in client activity and declining asset valuations,” said chairman and chief executive Lloyd Blankfein in a statement.
The New York-based investment bank said its earnings amounted to $1.81 per share in the three months ended Aug. 29, down sharply from $2.81-billion, or $6.13 per share, in the same quarter last year. Revenue skidded 51 per cent to $6.04-billion from $12.3-billion a year ago.
However, profit still beat Wall Street projections for $1.71 per share, according to analysts polled by Thomson Reuters. Revenue fell short of the $6.23-billion expected by analysts.
Goldman shares tumbled $9.35, or 6.9 per cent, to $126.14 in pre-market electronic trading. The stock is now down almost 50 per cent from its 52-week high of $250.70.
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