The Tax Break That Millions Miss Out On
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Goldman Sachs' first-quarter income fell 72 percent after the bank paid $1.64 billion in dividends to redeem preferred shares it issued to billionaire investor Warren Buffett during the financial crisis.The New York investment bank said Tuesday that it earned $908 million, or $1.56 per share, compared with $3.3 billion, or $5.59 a share in the first quarter of last year.
Excluding the dividend payment, earnings per common share were $4.38, beating the $3.95 per share forecast of analysts surveyed by FactSet.
Revenue fell 7 percent to $11.9 billion on weakness in the bank's core businesses of trading stocks and bonds and advising clients. Goldman's stock fell 0.9 percent to $152.38 in late morning trading.
The Federal Reserve gave Goldman Sachs Group Inc. permission to repay Berkshire Hathaway last month. While the Fed's decision wasn't a surprise given Goldman's ever-widening profits since the financial crisis, it reflected how far Goldman and other major banks have progressed from the darkest days of September 2008.
At that time, Buffett, who is CEO of Berkshire, helped shore up confidence in Goldman Sachs by making a $5 billion investment in the company. Berkshire received preferred shares that paid a 10 percent annual dividend. Goldman's second-quarter earnings will likely be affected by the redemption, which occurred on April 18.
In its first quarter, revenues from investment banking grew 5 percent to $1.27 billion. However, the bank's performance was mixed.
"In 2010, many of our clients' strategic and investment decisions were burdened by fears about the global economic outlook," Goldman Sachs' chief financial officer David Viniar told analysts in a conference call to discuss earnings.
Revenue from underwriting debt and stock grew 23 percent, but revenue from advising on financial transactions fell 23 percent. Revenues from trading fixed income, currency and commodities for clients also fell 28 percent.
The numbers were in line with first-quarter results reported last week by the investment banking divisions of JPMorgan Chase & Co. and Bank of America Corp. Both reported higher underwriting fees and lower trading. So far, only Citigroup has had a weaker performance compared with its peers. The bank had a 25 percent drop in investment banking, including lower underwriting
With its reputation for being the highest-paying institution on Wall Street, Goldman's compensation usually draws attention. In the first quarter, Goldman set aside $5.23 billion for compensation, down 5 percent from the same period last year. With a total employee count of 35,400, that works out to about $148,000 per employee in the first quarter.
In its first quarter, revenues from investment banking grew 5 percent to $1.27 billion. However, the bank's performance was mixed.
"In 2010, many of our clients' strategic and investment decisions were burdened by fears about the global economic outlook," Goldman Sachs' chief financial officer David Viniar told analysts in a conference call to discuss earnings.
Revenue from underwriting debt and stock grew 23 percent, but revenue from advising on financial transactions fell 23 percent. Revenues from trading fixed income, currency and commodities for clients also fell 28 percent.
The numbers were in line with first-quarter results reported last week by the investment banking divisions of JPMorgan Chase & Co. and Bank of America Corp. Both reported higher underwriting fees and lower trading. So far, only Citigroup has had a weaker performance compared with its peers. The bank had a 25 percent drop in investment banking, including lower underwriting
With its reputation for being the highest-paying institution on Wall Street, Goldman's compensation usually draws attention. In the first quarter, Goldman set aside $5.23 billion for compensation, down 5 percent from the same period last year. With a total employee count of 35,400, that works out to about $148,000 per employee in the first quarter.
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Reader Comments (Page 1 of 1)
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4-23-2011 @ 5:09AM
sharronlog chutke said...
In my opinion & that of millions of people all over the world Mr.Buffett would be the perfect choice as America's Treasury Secretary.
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4-26-2011 @ 7:27AM
thefacts22 said...
To bad he is to old,and most likely not interested in working with smart Obama gang
4-25-2011 @ 12:16PM
pepper4 said...
I love Warren but he is:
1. Too old
2. A big business guy
Who would benefit from the policies he supported?
4-30-2011 @ 9:18PM
MASTERGOD said...
Like anyone will every every take profits away from goldman thats funny to even see it but they have to control the obscene wealth generation with stories like this. funny
5-01-2011 @ 11:10AM
MyKisa said...
not much happens with this blogs for weeks at a time
5-03-2011 @ 2:17PM
BHarrison said...
Goldman Sachs was one of the largest perpetuators of the "frauds" that created the phoney economic boom that undermined our economy. Goldman orchestrated a lot of the "frauds"; shouldn't thier CEO and upper management "pay their share" of the economic costs for their misfeasance and malfeasance? Shouldn't they have been indicted and prosectued? Why are any "normal, average people" doing business with them?
5-04-2011 @ 5:14PM
STEVE said...
WHO CARES THEY WILL JUST STEAL MORE FROM THEIR CUSTOMERS NEXT 1/4.THATS COMPUTER TRADING, THE LEGAL WAY TO STEAL--KEEP IVESTING W/THEM YOU IDIOTS
5-06-2011 @ 4:58PM
MyKisa said...
is that moss growing on this story?
5-07-2011 @ 11:43AM
jeff bradley said...
why is this ancient content still up. this entire section has not been changed in weeks; what's up?
5-21-2011 @ 9:43PM
cathy c said...
Warren Buffet is no friend to America. The only thing he gives a rats azz about is his bank account. Guess you didn't watch that special, Warren Buffet and that other AH Gates flying over to China enjoying seeing the sight of a massive auto assembly plant being built. America is falling apart from massive job loss and they're over there WoooHoooing for the Chinese. Let that SOB rot in hell, He and all the rest of these snakes.
5-31-2011 @ 5:43PM
RVPPFS said...
This article is six weeks old! Surely there is something else that is of enough importance that it could replace this wasted space.
6-08-2011 @ 6:24PM
cathy c said...
Now we've got Steve Jobs wanting to build a spaceship building out in Cupertino. Maybe he can errect a great big statue of Genesh for all the East Indian workers he's got working over there rather than American workers.
6-10-2011 @ 9:07AM
AGraphicArtist said...
So the richest in America get richer while destroying the institution that made them rich. Typical.
6-12-2011 @ 2:49PM
Michael Szatalowicz said...
Just watch the movie, "Inside Job". The bastards are all evil. This isn't about party lines any more folks. This is about us vs. them. Them are the banks, wallstreet, and the government.
6-15-2011 @ 5:56AM
MyKisa said...
propagandist take over has left a casualty
6-22-2011 @ 2:04PM
Bob Bergstrom said...
Goldman Sachs could ask the government for more favors considering the amount of money they donated to Obama
7-01-2011 @ 7:28PM
John said...
Goldman Sachs begins with a "G" and the term scumbag ends with a "G". When it boils down to the responsibility for the current financial crisis that eliminated millions of jobs, perhaps both terms equate to exactly the same entitly. As has already been mentioned in posts on this blog, the informative film "Inside Job" states it very clearly. Please watch this film then make your own decision if Goldman should even be allowed to remain in business in the United States. In my opinion, evil and greedy are words too kind to describe Goldman Sachs.
7-14-2011 @ 12:06PM
cathy c said...
This is new news? Seems if Buffet gets out of anything it's for a good reason; Getting his money out of something before it goes to hell. This guy can small blood in the water from 500 miles away like some super shark. I'm sure he's doing so of this through a lot of inside informants.