Q1 Profit Plunges 60% in Worst Show Since Blankfein Took Over
New York: Goldman Sachs Group, the worst performer in the Dow Jones Industrial Average this year, posted a 60% drop in profit as the firm reported its lowest revenue for a first quarter since chief executive officer Lloyd Blankfein took the top post in 2006.
Net income declined to $1.14 billion, or $2.68 a share, from $2.84 billion, or $5.94, a year earlier, the New York-based company said Tuesday in a statement. That beat the $2.48 per-share estimate of 23 analysts surveyed by Bloomberg, as the firm cut costs deeper than expected. Goldman Sachs’s revenue fell 40% to $6.34 billion, missing the average estimate of $6.69 billion.
Blankfein is trying to ride out a years-long bondtrading slump that’s been compounded by market swings and stiffer regulations — challenges that forced many competitors to scale back. He’s embarked on the biggest cost-cutting push in years, following his largest competitors who have turned to expenses as the only lever to pull in an environment of deteriorating revenue.
It was “a quarter to forget,” Glenn Schorr, an analyst at Evercore ISI, said in a note. The firm’s 6.4% return on equity, a gauge of profitability, was “unGoldmanlike,” Schorr said and well below investors’ 11% “comfort zone.”
The question is whether costcutting, either in the first quarter or over a longer time period, will be enough to satisfy investors. The shares dropped 0.8% at 9:30 a.m. in New York.
Net income declined to $1.14 billion, or $2.68 a share, from $2.84 billion, or $5.94, a year earlier