Goldman Sachs shares slide as Q2 results disappoint
Investment bank Goldman Sachs (NYSE:GS) announced Tuesday it missed Street estimates as second quarter revenues dropped, despite a huge jump in earnings.
For the three months ending June 30, the company posted net earnings of $1.1 billion, or $1.85 per share, up 77% over earnings of $453 billion, or $0.78 per share, in the year-ago period.
Net revenues fell 18% to $7.3 billion, from $8.8 billion a year ago. Analysts had anticipated earnings of $2.27 per share, on revenues of $8.14 billion.
The disappointing announcement prompted Goldman Sachs' shares on the New York Stock Exchange to drop 1.8% to $127 per share as of 9:39 am EDT.
Goldman Sachs' investment banking segment posted revenues 54% higher than last year. The $1.45 billion that the segment drew in was driven by the firm's underwriting business, which increased sales 73% year-over-year to $811 million, due to a boost in debt and equity underwritings.
Its financial advisory business saw sales rise 35% to $637 million, indicating an increase in completed mergers and acquisitions.
However, revenues from the institutional client services segment dropped 29% to $3.52 billion, as lower mortgages, commodities and interest rate products pushed revenues in the fixed income, currency and commodities and client execution business down 53%.
Still, revenues in the equity trading portion of the unit rose 19% to $1.92 billion, reflecting strong equities in client execution, despite lower levels of activity, the company said.
The firm's investing and lending business also posted a 42% drop in revenue to $1.04 billion, including a $176 million loss stemming from its share in the Industrial and Commercial Bank of China (ICBC).
Goldman's investment management unit saw a 12% hike in revenues to $1.27 billion, reflecting an increase in fees and assets under management, which grew to $844 billion.
At the end of the quarter, Goldman Sachs' total capital was $247.57 billion.
During the period, the company repurchased 10.8 million shares of its common stock at an average cost of $139.20 per share, for a total of $1.5 billion, and announced its board approved the repurchase of an additional 75 million shares.
The firm also declared a 35-cent dividend to be paid on September 29.
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