Worst Quarter In Years For Goldman?

Posted by John Carney, Feb 25, 2008, 8:51am

The Wall Street Journal's influential Heard on The Street column calls Goldman Sachs "pricey compared with other Wall Street securities firms" and predicts After that Goldman's long run of climbing earnings may be coming to and end. The M&A slow down, so carefully documented in our weekly M&A wrap-up, should hurt revenues from fees while exposure to leveraged loans may drag down profits.

"Goldman could post in mid-March its smallest quarterly profit in three years," HotS writes.

Analysts have been hammering away at Goldman for the last few weeks, predicting a climb down from its elevated status on Wall Street. While no-one thinks we're going to have a surprise subprime write-down, many think the widening credit market crisis is finally about to take a piece out of the Goldman Sachs money mint.

So do the analysts and HotS have it right? Or does Goldman have yet another surprise up its sleeve, like when they revealed they had gone short subprime and made a bundle? Over to the right, at the top of the center column, we've created a poll for you to cast your vote. Goldman: long or short? You decide.


Goldman's Profit Magic May Be Fading [Wall Street Journal]

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Posted in: Goldman Sachs
Tags: leveraged loans, M&A, quarterly results, subprime, Wall Street Journal

Comments

Posted by mj, Feb 25, 2008 9:41AM

Not a huge shock. A bad qtr isn't a loss, and with vol down in most mkts and few deals done last qtr, a soft patch is to be expected.

Posted by guest, Feb 25, 2008 9:41AM

The last person to short Goldman was Fidel Castro and now he's no longer king of Cuba.

Posted by guest, Feb 25, 2008 10:23AM

Ron Paul shorted Goldman at $250.

Posted by onetwo , Feb 25, 2008 10:29AM

So, let's say GS "misses" unrealistic estimates; no blow ups or losses, just realistic revenues given the environment. Does Cramer keep telling his lemmings to buy on the "dip" or finally tell people to bail out after they've lost 20-30% since he told them to buy buy buy at 220?

Questions questions questions.

Posted by diablo, Feb 25, 2008 10:56AM

Goldman's response was swift. According to Alphaville:

Hot on the heels of Meredith Whitney’s latest caustic research note on Citi (2008 earnings cut from $2.70 to $0.75, shares could fall by a third), the banking team at Goldman Sachs on Monday came out with downgrades across the length and breadth of Wall St.

Some lowlights:

- Bear Stearns to write down an additional $1.4bn of Alt-A and CMBS; Q1 earnings estimate cut from $2.16 to $0.55

- Lehman Brothers to take additional hit of $3.5bn across leveraged loans, RMBS and CMBS; Q1 earnings cut from $1.68 to $0.45.

- Citi to unveil $12bn of additional write-downs, with ABS CDOs a particular problem; Q1 earnings estimate cut from $0.40 to $0.15.

- Merrill Lynch to write-down an extra $4bn across the board; Q1 estimate cut from $0.90 to $0.25.

Posted by guest, Feb 25, 2008 11:35AM

GS can and will always report any number it wants. It might only beat by .01 - but if you ever think those people don't have dozens of tricks up their collective sleeves to manufacture whatever earnings they feel like (and totally above board/legally - as it helps when you spend $$$ on the best lawyers in the business) you are seriously naive.

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