Goldman Sachs Group Inc. (GS) reported its second quarterly loss in 12 years as a public company as the value of the firm’s investments declined.
The third-quarter loss of $393 million, or 84 cents per share, compared with a profit of $1.9 billion, or $2.98, a year earlier, the New York-based company said today in a statement. The average estimate of 26 analysts surveyed by Bloomberg was for an 11-cent loss per share, with estimates ranging from a $1.02 loss to a $1.22 profit.
Chairman and Chief Executive Officer Lloyd C. Blankfein, 57, has tied Goldman Sachs’s fortunes to trading, which accounted for 53 percent of first-half revenue, and gains on the firm’s stakes in companies and real estate, which made up 20 percent. Declines in assets ranging from equities to mortgage- backed bonds in the third quarter led to lower trading volume and markdowns of the firm’s own investments.
The third quarter “was a very challenging trading quarter and subsequent quarters are likely to be a repeat given the current market environment,” Jon Fisher, a portfolio manager at Fifth Third Asset Management in Minneapolis, which has about $16 billion under management, said before the results were released. “Any positive comments made regarding the near-term trading environment are unlikely to be believed.”
The company, which said in July that it planned to cut about 1,000 jobs to reduce annual costs by $1.2 billion, said it employed 34,200 people at the end of September, down from 35,500 at the end of June.
Competitors Struggle
Some of Goldman Sachs’s rivals have already reported earnings that showed weaker trading revenue and investment- banking fees as global equity indexes fell amid the sovereign debt crisis in Europe.
JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, said last week that investment-banking fees dropped to the lowest level since 2006 and that trading revenue slid 13 percent from the second quarter. Citigroup Inc., the third-biggest U.S. lender, said investment-banking fees fell 21 percent from a year earlier and 32 percent from the second quarter.
Goldman Sachs rose 17 cents to $96.90 in New York yesterday. The stock dropped 42 percent this year, compared with a 24 percent decline in the Standard & Poor’s 500 Financials Index.
Goldman Sachs, which went public in May 1999, lost $2.12 billion, or $4.97 per share, in the fourth quarter of 2008 after markets plunged following the bankruptcy of Lehman Brothers Holdings Inc. Goldman Sachs rebounded to record profit in 2009 as asset values climbed and the company slashed pay.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
