Goldman Sachs reports weaker earnings but beats estimates
Goldman Sachs Group (GS) earned $1.9 billion for its third quarter, down from $3.19 billion in the year-ago quarter, as investors stayed on the sidelines. The firm beat analysts' estimates, earning $2.98 a share, down from $5.25 a share in the year-ago period. The analysts' consensus was $2.32 a share, according to Thomson Reuters. Revenue in 3Q10 was $8.9 billion, down from $12.37 billion from the same period a year ago. For the first nine months of the year, Goldman earned $5.97 billion, down from $8.44 billion for the first nine months of 2009. Revenue for the first nine months was $30.5 billion, down from $35.9 billion in the year-ago period. Goldman Sachs, a global investment banking, securities and investment management firm, provides financial services to corporations, financial institutions, governments and high-net-worth individuals. The firm said it is managing its capital conservatively. The firm’s Tier 1 capital ratio under Basel I was 15.7% as of Sept. 30, up from 15.2% as of June 30. The firm’s Tier 1 common ratio under Basel I was 13% as of September 30, 2010, up from 12.5% as of June 30, 2010. Net revenue in Asset Management and Securities Services were $1.4 billion, 3% lower than the third quarter of 2009 and 2% higher than the second quarter of 2010. Total assets were $909 billion, up 3% from June 30. The firm has been working to mend its reputation since the financial crisis, when its business dealings came into play. It paid $550 million to the Securities and Exchange Commission this summer for its role in handling of a complicated derivatives transaction. The SEC alleged that Goldman structured and marketed a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities. The SEC alleged that Goldman Sachs failed to disclose to investors the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO. The investors in the "Abacus" portfolio are said to have lost more than $1 billion, according to the SEC. For the fiscal year ending December 2010, analysts' consensus forecast is $14.42.