Goldman Sachs lost $1.02 bln in December 2008

Wednesday, April 15, 2009 at 10:26 PM Posted by Beijing News


US banking giant Goldman Sachs said Tuesday it lost 1.02 billion dollars in December 2008, according to a report filed with authorities a day after it reported profit of 1.8 billion dollars for the first quarter.

Goldman reported the one-month net loss, representing a loss of 2.15 dollars per share, to the Securities and Exchange Commission.

The New York-based bank had to report its earnings for the month of December 2008 because it has switched to a calendar year from a fiscal year that had ended in November.

On Monday after the stock market close, Goldman said it had net profit of 1.81 billion dollars for the 2009 first quarter, that ended on March 27, more than double analysts' expectations, and announced a dividend cut.

The bank had compared that first-quarter result with the net loss of 2.12 billion dollars it reported for the fourth quarter of 2008 which ended in November.

Separately, Goldman announced the price of common shares to be issued in a capital-raising plan and aimed at helping it repay the 10 billion dollars in government aid received in October.

Goldman said the share price was fixed at 123 dollars, a 5.50 percent discount from its closing share price Monday in New York.

Goldman, one of the major US banks undergoing federal "stress tests" to determine their viability, said Monday in announcing the public share offering that it intends to use the capital to help repay all of the cash injection from the Treasury's Troubled Asset Relief Program TARP.

The bank, which is the sole underwriter for the sale, is offering more than 40.65 million shares to the public, with an option to sell an additional 6.09 million shares if demand exceeds the initial offer.

Wall Street action Tuesday appeared to ignore the profit and punish the public share offering and dividend cut.

"Even though Goldman topped the consensus first-quarter earnings estimate with relative ease, investors are pushing back after the company opted to cut its quarterly dividend to 35 cents per share from 46.7 cents per share and priced a five-billion-dollar common equity offering at 123.00 dollars per share," analysts atcautioned clients in a note.

"The offering will prove dilutive to existing shareholders and is roughly 5.5 percent below the prior session's closing price. That has investors selling the headline after watching the stock climb more than 13 percent in the two sessions leading up to yesterday's close."

Goldman had closed 4.68 percent higher Monday on the New York Stock Exchange at 130.15 dollars. On Tuesday, it dropped 5.82 percent to 122.58 dollars in midday trading.

The Wall Street investment giant, which converted to a commercial bank last year to gain access to Federal Reserve resources, kicked off the quarterly earnings season for the financial sector.

Analysts said they had set the bar high for the industry reeling from the global financial and economic crisis.

"Goldman set a tone for bank earnings which probably won't be matched this earnings season. By paying the TARP funds it said that it did not have to worry about the next few quarters," said Douglas McIntyre at 24/7 .

"Goldman implied that its earnings won't be undermined by the troubles that may affect other financial firms as the economy continues to stumble and bank loans of almost every sort default with increasing frequency."

JPMorgan Chase and Citigroup, members of the blue-chip Dow Jones Industrial Average, are to report their earnings on Thursday and Friday, respectively.



A view of a mosque in Cairo during sunset. REUTERS/Tarek Mostafa

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)