Investing to Wealth

Filed under: Earnings reports, Goldman Sachs Group (GS)

Goldman Sachs Group (NYSE: GS) reported a $2.12 billion loss for the fourth quarter. So why is its stock up in pre-market? It's the usual reason -- investors expected it to lose even more money. But the real question for investors is whether Goldman will be able to earn a profit in 2009 or 2010. After all, beyond helping to restructure bankrupt companies there does not appear to be an obvious source of revenue growth for Goldman.

Goldman lost $2.12 billion in the fourth quarter due in part to write-downs of assets that it had overstated on its books. But investors expected a $2.5 billion loss so the stock was up 3.8% in pre-market and opened nearly 5% higher. One strange thing I have noticed in recent quarters is that banks report something called "negative net revenues" -- the result from enormous asset write-downs that offset any trading revenues -- which in Goldman's case totaled $1.58 billion.

Goldman's revenues across the board were way down for the quarter. Investment Banking revenues were down 48% to $1.03 billion; Financial Advisory revenues tumbled 54% to $574 million; Underwriting business fell 37% to $460 million; and Net revenues in Trading and Principal Investments had negative net revenues of $4.36 billion. That's not all but you get the idea -- business is bad.

Continue reading Great news! Goldman loses $2.12 billion

Great news! Goldman loses $2.12 billion originally appeared on BloggingStocks on Tue, 16 Dec 2008 09:22:00 EST. Please see our terms for use of feeds.