Quick Hits: All's Not Golden for Goldman
Brief scrutiny of today's headlines.
Goldman Sachs (GS) is no longer golden.
The company plans to cut about 10% of its staff, or about 3,200 workers, as revenue declines. Goldman Sachs has been the only firm among Wall Street's top five to remain profitable in the credit crunch.
So far, about 130,000 jobs in the financial industry have been eliminated since mid-2007. That's more that the cuts made after the Internet bubble burst in 2001.
There are almost certainly more problems ahead, if a Wall Street icon like Goldman Sachs sheds jobs. The ripple effect will be felt first in New York in reduced spending by big shots, but the real impact will come in reduced city and state tax revenue. A tax hike would worsen the downturn.
New York state budget planners look for a loss of 40,000 financial jobs this year.
Goldman Sachs converted to a bank holding company in September and has received $10 billion from the US Treasury. The company's stock is down about 57% from its 52-week high.
The job cuts are a sharp reversal for Goldman Sachs. Last month, the company's chief financial officer said he expected the number of employees to grow in the low single digits this year. This suggests the downturn is steeper and came faster than anyone expected.
Revenue at Goldman Sachs fell 32% from last year. Investment banking was off 26% while trading and principal investment dropped 45%. Mergers and acquisitions declined about 33%. Global equity offerings are down 39%, according to Bloomberg data.
Citigroup (C) has slashed 24,000 jobs in the last 18 months. Lehman, while filed for bankruptcy last month, cut about 14,000 jobs.
Merrill Lynch (MER) may cut about 10,000 jobs after Bank of America (BAC) completes its $50 billion acquisition.
As the headline writers at the tabloids say, Look Out Below!
Is there another Lehman Brothers out there?
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