Goldman Sachs Group Inc. is used to its quarterly earnings blowing away analysts estimates, and as the bank prepares to report its first quarterly loss it could do so again -- but just not in the way it would have hoped. Unless it pulls a rabbit out of its hat in a few weeks, Goldman will find itself
well into the red when it announces earnings for the quarter ended Nov. 28.
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Up until now
Goldman has managed to dance around many of the minefields that have decimated the
banking industry this year. But as the value of private equity, commercial real
estate, bond and equity assets continues to plunge, Goldman's luck may
have run out, as estimates
of the size of its loss are growing higher every day.
Tuesday morning The Wall Street Journal
reported that "industry insiders"
are telling it the bank could report a sky-high loss $2 billion or $5
per share, more than five times the current analyst consensus.
Ironically, the actions of the bank's former chief, Hank Paulson, may be
a contributor to Goldman's woes. When the Treasury changed course and
decided not to use the TARP to buy distressed assets, Goldman and many
other banks were once again left holding assets that they couldn't sell
except at fire-sale prices. Since that decision was announced, banking
stocks have been rocked, as investors flee the sector.
With shares of the bank already down 69% this year, Goldman's
shareholders will be praying for that rabbit to pop out of the hat. -
George White
See WSJ story
