Goldman reports record quarter
Goldman Sachs Group Inc. reported record fiscal fourth-quarter earnings Tuesday, continuing to avoid the multibillion-dollar mortgage-related losses incurred in recent months by its rivals.
The performance is allowing the world’s largest securities firm to increase its staff’s 2007 bonuses by 23% to $12.1 billion.
But the company’s stock slid $7.12, or 3.4%, to $201.51 after Chief Financial Officer David Viniar said he was “cautious about the near-term outlook.”
The Wall Street giant said its fiscal fourth-quarter profit rose 2% to $3.22 billion, or $7.01 a share, from $3.15 billion, or $6.59, a year earlier. Revenue in the period, which ended Nov. 30, rose 14% to $10.74 billion, boosted by growth in fees from investment banking and stock trading.
The results surpassed Wall Street projections for a profit of $6.61 a share and revenue of $10.16 billion, according to analysts polled by Thomson Financial.
Nonetheless, there had been widespread hope that Goldman had been able to take advantage of the recent market dislocation by scooping up distressed securities and locking in profit. Instead, Goldman said last month was one of its worst Novembers on record, and it wasn’t encouraging about the current quarter.
“We’re cautious about the near-term outlook for our businesses as we see dislocation in some of the world’s capital markets has continued,” Viniar told reporters. “We’re getting closer to the bottom.”
Viniar declined to disclose the size of any write-downs or gains on mortgage-related securities, saying only that the net effect on the firm was modest.
Investors pulled about $3 billion from Goldman’s so-called quantitative hedge funds during the quarter, Viniar said.
“Redemptions in the first quarter from what we can see will be even greater than that,” he said.
Goldman said its total compensation for fiscal 2007, including benefits and bonuses, rose 22% to $20.2 billion. Bonuses, which typically account for about 60% of pay, increased from $9.88 billion a year earlier.
The firm hasn’t said how much it would pay Chief Executive Lloyd Blankfein for the fiscal year. The Wall Street Journal reported last week that he would get close to $70 million. Last year Blankfein was paid $54 million.
The number of employees at Goldman increased 15% to 30,522 at the end of the fiscal year. Average compensation per employee climbed 6.4% to $661,490. The average bonus also rose 6.4%, to $396,894.
Goldman is the second of Wall Street’s five largest firms to post fourth-quarter earnings. Lehman Bros. Holdings Inc. reported last week that profit dropped 12% and said losses from the collapse of the sub-prime mortgage market would probably extend into next year.
