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Goldman profit slides on SEC charge, revenue drops
Headline Legal News |
2010/07/20 08:52
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pGoldman Sachs Group Inc. said Tuesday its second-quarter net income dropped 83 percent to $453 million as its trading revenue fell and it booked a charge for its settlement of civil fraud charges with the Securities and Exchange Commission./ppThe company's revenue fell short of expectations and helped send the stock market falling. Goldman followed IBM Corp. and Texas Instruments Inc., which late Monday reported revenue that disappointed investors./ppGoldman's stock dropped $1.89 to $143.79 in morning trading./ppGoldman took a $550 million charge to cover the cost of the settlement with the SEC that was announced last week. Earnings were also reduced by a one-time, $600 million charge tied to a new tax on bonuses in Britain./ppExcluding the one-time costs, net income after payment of dividends on preferred stock came to $2.75 per share, easily topping the $2.08 analysts forecast. Analysts typically exclude one-time charges from their estimates./ppRevenue fell 36 percent to $8.84 billion, short of the $8.94 billion predicted by analysts./ppThe drop in revenue that a number of companies have reported is unnerving investors, who see it as a sign that the economic recovery is stalling. Banks, however, have their own revenue issues. Goldman's trading revenue fell along with that of competitors including JPMorgan Chase amp; Co. and Bank of America Corp. that were hit hard by the spring plunge in the stock market. The drop in their revenue is adding to investors' concerns about how new federal regulations will affect banks' ability to profit from trading operations.
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