Banking & Finance

Goldman Sachs Sighs, Amputation Trumps Guillotine (GS)

Imagine a wide loss being considered a win.  That is partly the case at Goldman Sachs Group, Inc. (NYSE: GS) This morning.  The former “Golden Slacks” posted a loss of $4.97 EPS for the quarter and its revenue came in negative at -$1.58 billion now that the broker (or bank holding company) took many marks that it had not previously taken.

There are many important metrics here besides the earnings.  Its Tier 1 ratio was 15.6% at the end of the year.

As you would expect, investment banking revenue fell sharply by 48% to$1.03 billion.  Its assets management revenues fell 19% to $945 million.  Compensation, benefits, and expenses were down by 46% to $10.93 billion.

Goldman also noted that its total assets were $885 billion, a drop of18%.  Total shareholder equity was  $64.37 billion.  Wherethis gets more interesting is that the firm’s book value is up at$98.68 as of the report.

Goldman also set a $0.4667 quarterly dividend.

The news sounds pretty crummy as it was an even wider loss thanexpected.  But many are taking this to mean that Goldman took its muchneeded marks to get all that it could off the books so that 2009 looksmore normalized.

Shares are up almost 6% at $70.10 in pre-market trading.  This could trade all over the place today.

Jon C. Ogg
December 16, 2008