Goldman Sachs 3Q Earnings Big Disappointment

Goldman Sachs, the world’s most profitable and hitherto respected Investment Banks has shocked analysts and industry players alike by releasing 3Q earnings that fall far below expectations.
Goldman Sachs posted a loss of $393 Million, its second loss ever since it became a publicly traded company over 12 years ago.

Revenue was down by 60% to $3.59 Billion as opposed to $8.9 Billion a year ago.
Revenues for the Investment Banking Division were down 33% signaling a drop in Merger and Activities over the period. Revenues across other divisions such as Institutional Client Services, and Fixed Income, Currency and Commodities Execution were also lower.

Revenues in Equities were up 33% over 3Q 2010. The report attributed this gain to “significantly higher transactions and fees”, and “higher transaction values”. However it is simply a reflection of Goldman’s ability to make money trading even when markets are down.

“CEO and investor confidence as well as asset prices across markets were lower in the third quarter given the uncertain macroeconomic and market conditions. Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “However, we believe the strength of both our client franchise and our balance sheet positions us well for when economies and markets improve.”

In order to make up for losses, Goldman has let go about 1,300 workers since the end of June and has also reduce compensation and benefits due employees by 59% to $1.578 Billion.
Goldmans results should serve as a benchmark from what is expected from the rest of the industry.