Goldman Sachs Posts First Loss Since Going Public

In this Oct. 10, 2008 file photo, Lloyd Blankfein, CEO of Goldman Sachs, walks in the financial...

In this Oct. 10, 2008 file photo, Lloyd Blankfein, CEO of Goldman Sachs, walks in the financial district after attending a panel discussion at the New York Stock Exchange (not shown) in New York. Goldman Sachs said Tuesday, Dec. 16, 2008, it had its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter. (AP Photo/Mark Lennihan, File)

(AP)

Goldman Sachs Group Inc. on Tuesday reported its first quarterly loss since it went public in 1999, losing $2.29 billion during its fiscal fourth quarter, but investors seemed unfazed and sent its shares higher.

The loss proves the turmoil in the financial markets has tripped up even the best-run financial institutions. The New York-based bank has long been considered the premier investment bank on Wall Street, and in recent quarters, the sturdiest amid the turmoil.

The Wall Street firm lost $4.97 per share in the quarter ended Nov. 30, compared with earnings of $3.17 billion, or $7.01 per share, last year.

Analysts polled by Thomson Reuters, on average, forecast a loss of $3.73 per share for the latest quarter. Over the past several weeks, analysts sharply slashed their estimates amid ongoing concern about investment losses. Just a month ago, analysts predicted Goldman would lose just 28 cents per share, with some analysts still predicting a quarterly profit.

Goldman's shares jumped $9.91, or 15 percent, to $76.37 in late trading amid a broad rally on Wall Street. As of Monday's close, the shares were down 69 percent in 2008.

Analysts attributed the strong stock performance Tuesday to investors finding the few bright spots among the gloomy results, noting that while fourth-quarter losses were big, they were not well beyond expectations.

Morningstar Inc. equity analyst Michael Wong said Goldman was able to shrink its total assets by 18 percent to $885 billion during the quarter, and that has helped reduce leverage.

"They've been able to delever faster than anyone could have dreamed of, without taking extreme mark-to-market losses," Wong said. "The confidence in the balance sheet is probably higher than in the past year."

Banks have been trying to reduce leverage — the amount of money borrowed compared to a company's capital — to help avoid cash shortages as losses have increased.

Denise Valentine, a senior analyst at Aite Group LLC, cited some bright spots, including full-year results in the asset management and securities services unit. Full-year revenue in the division grew 11 percent to $7.97 billion.