Net income dropped to $845 million, or $1.81 a share in the three months ended Aug. 29, from $2.85 billion, or $6.13, a year earlier, New York-based Goldman said today in a statement. The earnings compare with the average estimate of $1.71 a share of 19 analysts surveyed by Bloomberg. Goldman has beaten estimates for 13 straight quarters.
After setting Wall Street profit records in 2006 and 2007, Chief Executive Officer Lloyd Blankfein is grappling with market convulsions that have driven Merrill Lynch & Co. and Bear Stearns Cos. into emergency sales and Lehman Brothers Holdings Inc. into bankruptcy. Goldman shares slumped 12 percent and its senior notes dropped to a record low in New York trading yesterday on concern no investment bank, even the most profitable, was safe.
``We own Goldman because they're best in class, they're taking share from those that are having trouble, but you can't expect them to turn water into wine,'' said Ralph Cole, a vice president in research at Ferguson Wellman Capital Management Inc. in Portland, Oregon, which oversees $2.7 billion, before the earnings report. ``It's a tough environment out there and you can only do so much.''
While Goldman has suffered a fraction of the writedowns on fixed-income assets that New York-based competitors Citigroup Inc. and Merrill have taken, its shares have dropped 37 percent this year as markets tumbled and fees from securities underwriting and providing merger advice dried up. The drop in third-quarter profit is the biggest since a 60 percent decline in 1999, which was caused by one-time costs tied to the firm's initial public offering.
``We remain well-positioned to meet the needs of our clients and identify and act on the right market opportunities,'' Blankfein said.