Goldman Sachs posts first loss since going public

Financial Crisis Posted on

Goldman Sachs Group Inc. on Tuesday reported its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter.

The loss proves the turmoil in the financial markets has tripped up even the best-run financial institutions. The New York-based bank has long been considered the premier investment bank on Wall Street, and in recent quarters, the sturdiest bank amid the market turmoil.

The Wall Street firm lost $4.97 per share in the quarter ended Nov. 30. In the year-ago quarter, Goldman earned $3.17 billion, or $7.01 per share.

Analysts polled by Thomson Reuters, on average, forecast a loss of $3.73 per share for the latest quarter. Over the past several weeks, analysts sharply slashed their estimates amid ongoing concern about investment losses. Just a month ago, analysts predicted Goldman would lose just 28 cents per share, with some analysts still predicting a quarterly profit.

Investors shook off the disappointing news, sending shares higher by $3.53, or 5.3 percent, to $69.99 in early morning trading.

The investment banking sector was turned on its head in September when Lehman Brothers filed for bankruptcy and Goldman and Morgan Stanley became bank holding companies. Like most banks, Goldman was tripped up by the plunging value of its investments, especially at its principal trading desk.

Goldman reported negative revenue of $4.36 billion in its trading and principal investments unit, which includes its fixed income, equities and principal investments divisions. Negative revenue occurs when a company must reverse some previously recognized revenue because its value has declined.

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