Tarnished Gold

Goldman Sachs Group might be worth about 40%, or $13 billion, less as a public company than it was three months ago, just after the biggest investment banking partnership proposed selling shares to the public.

Executives of the 129-year-old firm in June recommended going public, which would provide the company with stock to pay for acquisitions and compensate employees. Partners, using the market values of rivals Merrill Lynch and Morgan Stanley Dean Witter as guides, said Goldman would be worth as much as $33 billion--which would have meant that some senior executives would get more than $100 million in stock. The plan was approved Aug. 10.

But those estimates were made before Russia’s currency devaluation and debt default caused bond trading losses for many firms and before concern about slowing economies in Asia and Latin America sent U.S. stocks tumbling. With Merrill shares down 47% since mid-July and Morgan Stanley off 44%, some analysts said Goldman might postpone the initial public offering--now planned for November--though executives said they aren’t canceling the sale.

“The reasons for doing the offering are still there,” said Brown Bros. Harriman & Co. analyst Raphael Soifer. Still, “the market has been so volatile it has caused every IPO issuer to take a deep breath.”