Goldman Earnings and Revenue Fall

Those master traders at Goldman Sachs didn’t see it coming, either.
The “flash crash” and the rest of the stock market madness in May and June, as well as the cost of settling an embarrassing civil fraud suit, hammered Goldman’s second-quarter profits. Earnings plunged 82 percent.

The results were Goldman’s worst quarterly performance since the depths of the financial crisis in late 2008, and the first time that it had missed analysts’ estimates in five years.

“It’s rare for them to miss, but it does happen,” said Guy Moszkowski, an analyst with Bank of America Merrill Lynch. “It was a very, very bad operating environment.”

But at $613 million, the investment bank’s quarterly profit was well above the $550 million that Goldman agreed to pay last week to settle fraud claims brought by the Securities and Exchange Commission.

The agency had accused Goldman of misleading institutional investors who bought financial products linked to subprime mortgages that ultimately defaulted. Goldman did not admit wrongdoing but agreed to provide better disclosure to investors in mortgage securities as part of the settlement, one of the largest ever for a Wall Street firm.

On a conference call with reporters Tuesday, the focus remained on the S.E.C’s suit and the after-effects of the settlement. Goldman’s chief financial officer, David A. Viniar, struck an apologetic tone when it came it to the case but insisted Goldman’s sterling image had not been tarnished.

“We acknowledge that we made a mistake, we regret that we made a mistake and we know it was not good for us,” he said. “I can’t tell you if there were calls that we didn’t get; that’s impossible to measure. We feel that our clients have been pretty supportive of us, so far as we can tell.”

Besides the weak trading results, the lackluster numbers also reflected weakness across a range of businesses, including its investment banking unit. “It was really driven by lack of client activity and lack of revenue,” said Mr. Viniar. - See more at: http://simplexmagazine2.blogspot.com.br/2010/07/goldman-earnings-and-revenue-fall.html#sthash.O5cfTXZw.dpuf              Cariri