Goldman Sachs Falls After Earnings Miss "Whisper Number"

Goldman Sachs (GS) has announced Q3 EPS of $5.25, which is about  $1 ahead of estimates. But it wasn’t the total blowout that traders were actually expecting, and now the stock is off about $3 $5 pre market.

Revenue of over $12 billion was also ahead of estimates — again it’s good, but not the wild blowout.

Said Lloyd Blankfein:

“Although the world continues to face serious economic challenges, we are seeing improving conditions and evidence of stabilisation, even growth, across a number of sectors… Our client franchise businesses — advisory, financing, market making and asset management — contribute to and benefit from the overall improvement in conditions. Because the job market, and growth more generally, remain under stress, we continue to be focused on actively helping our clients in order to promote greater economic activity.”

Here are some of their identified highlights. Basically, they’re benefitting from the massive amount of debt (especially government debt that’s flowing right now. It’s just a great business to be in.:

  • Goldman Sachs continued its leadership in worldwide mergers and acquisitions, ranking first in worldwide announced transactions for the calendar year-to-date. (2)
  • Fixed Income, Currency and Commodities (FICC) generated quarterly net revenues of $5.99 billion, reflecting strong results across most businesses.
  • Equities generated quarterly net revenues of $2.78 billion, reflecting strong results across the franchise.
  • The firm’s Tier 1 capital ratio under Basel I (3) was 14.5% as of September 25, 2009, up from 13.8% as of June 26, 2009. The firm’s Tier 1 common ratio (3) under Basel I was 11.6% as of September 25, 2009, up from 10.9% as of June 26, 2009.
  • Book value per common share increased 4% during the quarter to $110.75 and tangible book value per common share (4) increased 5% during the quarter to $101.39.

And here’s the word on compensation:

Compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as payroll taxes, severance costs and benefits) were $5.35 billion, which was higher than the third quarter of 2008, due to higher net revenues. The ratio of compensation and benefits to net revenues was 43.3% for the third quarter of 2009 (compared with 48.3% for the second quarter of 2009), resulting in a ratio of compensation and benefits to net revenues of 47.0% for the first nine months of 2009. This ratio was 49.0% for the first six months of 2009 and 48.0% for the first nine months of 2008.

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